Given:
Principal = $400
Rate of interest = 6% compounded monthly
Time = 5 years.
To find:
The amount in the bank after 5 years.
Solution:
The formula for amount is:
[tex]A=P\left(1+\dfrac{r}{n}\right)^{nt}[/tex]
Where, P is principal, r is the rate of interest, n is the number of time interest compounded in an year and t is the number of year.
Interest compounded monthly. So, [tex]n=12[/tex].
Putting [tex]P=400, r=0.06, n=12[/tex] and [tex]t=5[/tex], we get
[tex]A=400\left(1+\dfrac{0.06}{12}\right)^{12(5)}[/tex]
[tex]A=400\left(1+0.005 \right)^{60}[/tex]
[tex]A=400\left(1.005 \right)^{60}[/tex]
[tex]A\approx 539.54[/tex]
Therefore, the amount of money in the bank after 5 years is $539.54.
