Tessa invests 5400 in a new savings account which earns 4.2% annual interest, compounded monthly. What will be the value of her investment after 6 years? Round to the nearest cent.

Solution

Solution

Amount : 6944.56

Solution steps

Translate the problem into an equation:

A = 5400 (1 + \frac{0.042}{12})^{12 \cdot 6}

5400 (1 + \frac{0.042}{12})^{12 \cdot 6} = 6944.56250 \dots

Round to the nearest hundredth:

6944.56

Amount : 6944.56

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