Given:
Deposit = $7500
Rate of interest = 2.75%
Time = 4 years
Compounded monthly
n = 12
To find:
The balance in the account after 4 years
Solution:
Compound interest formula:
[tex]$A=P\left(1+\frac{r}{n}\right)^{n t}[/tex]
Here P = $7500, r = 2.75%, n = 12 and t = 4.
[tex]$A=7500\left(1+\frac{2.75\%}{12}\right)^{12\times 4}[/tex]
To convert percentage into fraction, divide by 100.
[tex]$A=7500\left(1+\frac{\frac{2.75}{100} }{12}\right)^{48}[/tex]
[tex]$A=7500\left(1+\frac{0.0275 }{12}\right)^{48}[/tex]
[tex]$A=7500\left(\frac{12+0.0275 }{12}\right)^{48}[/tex]
[tex]$A=7500\left(\frac{12.0275 }{12}\right)^{48}[/tex]
[tex]$A=8371.03[/tex]
The balance in his account after 4 years is $8371.03.
