Question

How much would $500 invested at 6% interest compounded monthly be worth after years, `A(t)=P(1+r/n)^(nt)`?

Answer 1

`A(t)=500xx1.005^(12t)` after `t` years.

Explanation:

Here, we have been given Principal amount invested `P`, `r` rate of interest per annum and `n` tells us how frequently (at regular intervals) interest is compounded in a year. This gives amount at the end of `t` tears as `A(t)=P(1+r/n)^(nt)`.

Here `P=$500`, `r=6%=0.06`, `n=12` (as it is compounded every month), hence

`A(t)=500(1+0.06/12)^(12t)=500xx1.005^(12t)`