Gabriel put $6000 in a 2-year CD paying 4% interest, compounded monthly After 2 years, he withdrew all his money. What was the amount of the withdrawal?

1 Answer
Jan 25, 2018

Answer:

Amount of withdrawal #color(blue)(A = $ 6,498.86)#

Explanation:

A = P (1 + (r/n))^(nt)# where

P = principal amount (the initial amount you borrow or deposit)

r = annual rate of interest (as a decimal)

t = number of years the amount is deposited or borrowed for.

A = amount of money accumulated after n years, including interest.

n = number of times the interest is compounded per year

Given P = $6,000, r = 4%, = 0.04, n = 12, t = 2.

To find A.

#A = 6000 * (1 + (0.04/12))^(12 * 2)#

#A = 6000 * (12.04/12)^(24)#

#color(blue)(A = $ 6,498.86)#