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Use the compound interest formulas A=P(1+r/n)^nt and A=Pe^rt to solve. Find the accumulated value of $20,000 for 5 years at an interest rate of 6.5% if the money is compounded monthly. What is the accumulated value if the money is compounded monthly?

Respuesta :

Given: An investment of $20000 for 5 years at an interest rate of 6.5%.

Required: To determine the accumulated value if the money is compounded monthly.

Explanation: The formula for compound interest is as follows-

[tex]A=P(1+\frac{r}{n})^{nt}[/tex]

Here, n=12 as the money is compounded monthly in a year. Also

[tex]\begin{gathered} P=20000 \\ t=5 \\ r=\frac{6.5}{100} \\ =0.065 \end{gathered}[/tex]

Substituting the values into the formula as-

[tex]A=20000(1+\frac{0.065}{12})^{12\times5}[/tex]

Further solving-

[tex]A=27,656.35[/tex]

Final Answer: The accumulated value is $27,656.35

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