Question

warren is saving up money to buy a car. warren puts $5,000.00 into an account which earns 3% interest, compounded monthly. how much will he have in the account after 7 years?
use the formula $a = p\left(1 + \frac{r}{n}\
ight)^{nt}$, where $a$ is the balance (final amount), $p$ is the principal (starting amount), $r$ is the interest rate expressed as a decimal, $n$ is the number of times per year that the interest is compounded, and $t$ is the time in years.
round your answer to the nearest cent.
$

Explanation:

Step1: Identify given values

$P = 5000$, $r = 0.03$, $n = 12$, $t = 7$

Step2: Calculate $\frac{r}{n}$

$\frac{0.03}{12} = 0.0025$

Step3: Calculate $nt$

$12 \times 7 = 84$

Step4: Calculate $1+\frac{r}{n}$

$1 + 0.0025 = 1.0025$

Step5: Calculate $(1+\frac{r}{n})^{nt}$

$1.0025^{84} \approx 1.2333548$

Step6: Compute final amount $A$

$A = 5000 \times 1.2333548$

Answer:

$\$6166.77$