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Rudy Banks has won $5000 to attend university. If he invests the money in an
account at 12% per annum, compounded monthly, how much can he draw monthly
for the next 3 years?

Respuesta :

Space

Answer:

$7153.84

General Formulas and Concepts:

Pre-Algebra

Order of Operations: BPEMDAS

  1. Brackets
  2. Parenthesis
  3. Exponents
  4. Multiplication
  5. Division
  6. Addition
  7. Subtraction
  • Left to Right

Algebra I

Compounded Interest Rate Formula: [tex]\displaystyle A = P(1 + \frac{r}{n})^{nt}[/tex]

  • P is principle amount
  • r is rate
  • n is compound rate
  • t is time

Step-by-step explanation:

Step 1: Define

Identify variables

P = 5000

r = 12% = 0.12

n = 12

t = 3

Step 2: Find Interest

  1. Substitute in variables [Compounded Interest Rate Formula]:                     [tex]\displaystyle A = 5000(1 + \frac{0.12}{12})^{12(3)}[/tex]
  2. [Exponents] Multiply:                                                                                        [tex]\displaystyle A = 5000(1 + \frac{0.12}{12})^{36}[/tex]
  3. (Parenthesis) Add:                                                                                            [tex]\displaystyle A = 5000(1.01)^{36}[/tex]
  4. Evaluate exponents:                                                                                         [tex]\displaystyle A = 5000(1.43077)[/tex]
  5. Multiply:                                                                                                             [tex]\displaystyle A = 7153.84[/tex]

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