Juan invests $750 in an account paying 5.2% interest compounded monthly. After 3 years, Juan will have approximatelyGroup of answer choices$990$876.32$1010$950
Solution
To solve this problem, we need to use the formula for compound interest, which is:
A = P(1 + r/n)^(nt)
where:
- A is the amount of money accumulated after n years, including interest.
- P is the principal amount (the initial amount of money).
- r is the annual interest rate (in decimal form, so 5.2% becomes 0.052).
- n is the number of times that interest is compounded per year.
- t is the time the money is invested for in years.
In this case, P = $750, r = 0.052, n = 12 (since interest is compounded monthly), and t = 3.
Substituting these values into the formula, we get:
A = 750(1 + 0.052/12)^(12*3)
Now, we just need to calculate the value of A.
A = 750(1 + 0.004333333)^(36) A = 750(1.004333333)^36 A = 750 * 1.181136548 A = $885.852411
So, Juan will have approximately 876.32.
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