Tom invested $7,000 at 6.5% interest compounded monthly. How much will be in this account after 18 months?
See previous post: Mon,11-24-14, 6:31 PM
To find the amount in the account after 18 months, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A is the amount after time t
P is the principal amount (the initial investment)
r is the annual interest rate (in decimal form)
n is the number of times that interest is compounded per year
t is the time in years
Given:
P = $7,000
r = 6.5% = 0.065 (decimal form)
n = 12 (compounded monthly)
t = 18 months = 18/12 = 1.5 years
Now, let's plug the values into the formula:
A = 7000(1 + 0.065/12)^(12*1.5)
Calculating this expression will give us the amount in the account after 18 months.