Answer:
Equation: [tex]F=1500(1.0025)^{12t}[/tex]
The balance after 5 years is: $1742.43
Step-by-step explanation:
This is a compound growth problem . THe formula is:
[tex]F=P(1+\frac{r}{n})^{nt}[/tex]
Where
F is future amount
P is present amount
r is rate of interest, annually
n is the number of compounding per year
t is the time in years
Given:
P = 1500
r = 0.03
n = 12 (compounded monthly means 12 times a year)
The compound interest formula modelled by the variables is:
[tex]F=1500(1+\frac{0.03}{12})^{12t}\\F=1500(1.0025)^{12t}[/tex]
Now, we want balance after 5 years, so t = 5, substituting, we get:
[tex]F=1500(1.0025)^{12t}\\F=1500(1.0025)^{12*5}\\F=1500(1.0025)^{60}\\F=1742.43[/tex]
The balance after 5 years is: $1742.43
