How much money would you have in 4 years if you deposited $2500 in an account paying 5.5% annual interest, compounded monthly?
P = Po(1+r)^n.
Po = $2500 = Initial deposit.
r = (5.5%/12)/100% = 0.004583 = Monthly
% rate expressed as a decimal.
n = 12Comp/yr * 4yrs = 48 Compounding
periods.
Plug the above values into the given Eq and get:
P = $3113.63.
To calculate the amount of money you would have in 4 years if you deposited $2500 in an account paying 5.5% annual interest, compounded monthly, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the principal amount (initial deposit)
r = the annual interest rate (as a decimal)
n = the number of times interest is compounded per year
t = the number of years
In this case, P = $2500, r = 5.5% (or 0.055 as a decimal), n = 12 (compounded monthly), and t = 4 years.
Now, let's plug the values into the formula:
A = $2500(1 + 0.055/12)^(12*4)
First, we need to simplify the expression inside the parentheses:
A = $2500(1 + 0.004583333)^(48)
Next, calculate the power:
A = $2500(1.004583333)^(48)
Finally, calculate the future value A:
A ≈ $2500(1.266429376)
A ≈ $3,166.07
Therefore, you would have approximately $3,166.07 in the account after 4 years if you deposited $2500 in an account paying 5.5% annual interest, compounded monthly.