Question

How much would $500 invested at 5% interest compounded monthly be worth after 4 years? Round your answer to the nearest cent. A(t)=P(1+r/n)^nt

Answer 1

It will be worth $745.89 assuming compounding 365 times per year. The formula for compound interest is  

A = P * (1 + (r/n))^(nt)  

A = total return of both principal and interest  

P = principal invested ($500)  

r = interest rate expressed as a decimal (.05)  

n = number of compounding periods per year (365)  

t = time in years (8)