"y=a(1+r)^t I know this is a really basic question for this website, but I can't find it anywhere else. This is the question: ""If you deposit $3,750 in an account that pays 6% annual interest compounded monthly, what is the balance of the account after 11 years?"" The formula I'm using is y=a(1+r)t, with a being the initial amount, r being the rate in decimal form, and t is time relative to the rate, which makes y=3,750(1+.06)132 How do I solve for the ending amount (y)?"

Staffangz

Staffangz

Answered question

2022-09-14

y = a ( 1 + r ) t
I know this is a really basic question for this website, but I can't find it anywhere else.
This is the question: "If you deposit $3,750 in an account that pays 6% annual interest compounded monthly, what is the balance of the account after 11 years?"
The formula I'm using is y = a ( 1 + r ) t , with a being the initial amount, r being the rate in decimal form, and t is time relative to the rate, which makes y = 3 , 750 ( 1 + .06 ) 132
How do I solve for the ending amount (y)?

Answer & Explanation

Jovany Newman

Jovany Newman

Beginner2022-09-15Added 10 answers

A better formula to use would be
y = a ( 1 + r k ) k t ,
where k is the number of times the interest is compounded per year. So, plugging in your information gives
y = 3750 ( 1 + .06 12 ) 132 = $ 7243.55

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