If $8,500 is deposited in a compound interest account paying 3.9% interest annually, how much will be in the account after 12 years?
Round your answer to the nearest cent.
8500 * (1+.039)^12 = 13452.58
To find out how much will be in the account after 12 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit)
r = annual interest rate (as a decimal)
n = number of times that interest is compounded per year
t = number of years the money is invested/borrowed for
In this case:
P = $8,500
r = 3.9% = 0.039 (as a decimal)
n = 1 (interest is compounded annually)
t = 12 years
Plugging in these values into the formula, we can calculate the future value A:
A = 8500(1 + 0.039/1)^(1*12)
A = 8500(1 + 0.039)^(12)
A = 8500(1.039)^(12)
A ≈ 8500(1.474161)
A ≈ 12524.08
Rounding the answer to the nearest cent, the amount in the account after 12 years should be approximately $12,524.08.