SOLUTION: Find the compound interest on $5000 at 6% pa.a compounded monthly for 2 years (2dps). I know the formula but how do you substitute this question into the formula? Thanks very m

Algebra ->  Expressions -> SOLUTION: Find the compound interest on $5000 at 6% pa.a compounded monthly for 2 years (2dps). I know the formula but how do you substitute this question into the formula? Thanks very m      Log On


   

Question 1037141: Find the compound interest on $5000 at 6% pa.a compounded monthly for 2 years (2dps).
I know the formula but how do you substitute this question into the formula?
Thanks very much.
Answer by josmiceli(19441) About Me  (Show Source):
You can put this solution on YOUR website!
+A+=+P%2A%28+1+%2B+%28+r%2Fn+%29+%29%5E%28nt%29+
+P+=+5000+
+r+=+.06+
+t+=+2+
+n+=+12+
-------------------
+A+=+5000%2A%28+1+%2B+%28+.06%2F12+%29+%29%5E%28+12%2A2+%29+
+A+=+5000%2A%28+1+%2B+.005+%29%5E24+
+A+=+5000%2A1.005%5E24+
*+A+=+5000%2A1.12716+
+A+=+5635.8+
----------------------
The interest on the principle, $5,000 is
+5635.8+-+5000+=+635.8+, $635.80
---------------------------------
Going back to:
*+A+=+5000%2A1.12716+
+A+=+5000%2A%28+1+%2B+.12716+%29+
Let +I+ = interest paid
+A+=+5000+%2B+5000%2A.12716+
+A+=+P+%2B+I+