Question

Tom invests $6,000 for five years at 8% compounded monthly . How much will he have after the five years? and what is the formula for it?

Answer 1

Are you aware of what compounded monthly interest is?

Answer 2

i have no idea

Answer 3

There are two types of interest simple interest and compound interest,

Simple interest: Interest is given but from the original amount, in this context it will always be 8% of 6000 being added

Compound interest is a bit more complicated it means that first month it will be 8% of 6000 but the second month it will be 8% of whatever 6000 plus the old interest is

Answer 4

So what is 8% percent

Answer 5

$480 right?

Answer 6

Correct

Answer 7

ok so what is next?

Answer 8

at the end of the first moth you will have $6480,
second month is 8% of 6480, an on and on until 5 years

Answer 9

oh ok is there a certain formula for that?

Answer 10

After 5 years you will have $8,939.07

Answer 11

Sorry i cant remember the formula

Answer 12

thats alright! you helped a lot!

Answer 13

thanks!

Answer 14

Here you can use this to work it out for now, ill try to remember

http://www.moneychimp.com/calculator/compound_interest_calculator.htm

Answer 15

oh wait i might have found it!

Answer 16

M = P( 1 + i )n

M is the final amount including the principal.

P is the principal amount.

i is the rate of interest per year.

n is the number of years invested.

Answer 17

\[A=p(1+r/n)^{nt}\]

Answer 18

6000x(1+12)x5= Answer

Answer 19

as your doing it mothly so 12 times an year

Answer 20

monthly*

Answer 21

ok thanks

Answer 22

If i was helpful a medal would be appreciated

Answer 23

Thank You

Answer 24

no, thank you!

Answer 25

Any other help just @SchoolSlacker me

Answer 26

sure thing :)