If $49000 is invested at an interest rate of 2.5% per year find the amount of the investment at the end of 20 years if the money is compounded monthly. Round to the nearest hundredth.
A) $50239.13
B) $49000
C) $80292.21
D) $80745.33
E) $51082.58

Question

Quizplus · Accepted Answer

We use the formula $A=P\left(1+\frac{r}{n}ight)^{nt}$ where $A$ is the amount at the end, $P$ is the principal, $r$ is the annual interest rate, $n$ is the number of times compounded per year, and $t$ is the number of years. Here, $P=49000$, $r=0.025$, $n=12$ (compounded monthly), and $t=20$. Substituting these values, we get $A=49000\left(1+\frac{0.025}{12}ight)^{12\cdot20}\approx80745.33$. Thus, the closest answer choice is $\boxed{	ext{(D) }80745.33}$.

If $49000 Is Invested at an Interest Rate of 2