Suppose 1500 is invested at a rate of 5 per year compounded

Suppose $1500 is invested at a rate of 5% per year compounded monthly. (Round your answers to the nearest cent.) (a) Find the principal after 1 month. $ (b) Find the principal after 6 months. $ (c) Find the principal after 1 year. $ (d) Find the principal after 20 years. $

Solution

A=P(1+(r/n))^nt

P=amount invested ,t= time in years , r =rate of iinterest per year ,n =number of times compounded in year,A=amount after time t

a)P=1500,r=5%=0.05, t=1/12 , n=12

A=1500(1+(0.05/12))^12*(1/12)

A=1506.25

principal after 1 month=1506.25 dollars

b)

P=1500,r=5%=0.05, t=1/2 , n=12

A=1500(1+(0.05/12))^12*(1/2)

A=1537.89

principal after 6 months=1537.89 dollars

c)

P=1500,r=5%=0.05, t=1 , n=12

A=1500(1+(0.05/12))^12*(1)

A=1576.74

principal after 1 year=1576.74 dollars

d)

P=1500,r=5%=0.05, t=20 , n=12

A=1500(1+(0.05/12))^12*(20)

A=4068.96

principal after 20 years=4068.96 dollars