Answer:
$1,229.75
Step-by-step explanation:
Lets use the compound interest formula provided to solve this:
[tex]A=P(1+\frac{r}{n} )^{nt}[/tex]
P = initial balance
r = interest rate (decimal)
n = number of times compounded annually
t = time
First, change 3.25% into a decimal:
3.25% -> [tex]\frac{3.25}{100}[/tex] -> 0.0325
Since the interest is compounded monthly, we will use 12 for n. Lets plug in the values now:
[tex]A=12,025(1+\frac{0.0325}{12})^{12(3)}[/tex]
[tex]A=13,254.75[/tex]
Lastly, subtract A from P to get the interest earned:
[tex]13,254.75 - 12,025 = 1,229.75[/tex]
