Answer
(a) After four years, there will be \$3,240.05 in the account.
(b) The interest earned is \$740.05
Work Step by Step
(a) We can use this formula:
$A = P~(1+\frac{r}{n})^{nt}$
$A$ is the final amount in the account
$P$ is the principal (the amount of money invested)
$r$ is the interest rate
$n$ is the number of times per year the interest is compounded
$t$ is the number of years
$A = P~(1+\frac{r}{n})^{nt}$
$A = (\$2500)~(1+\frac{0.065}{12})^{(12)(4)}$
$A = \$3240.05$
After four years, there will be \$3240.05 in the account.
(b) We can find the interest earned.
$A - P = \$3240.05 - \$2500 = \$740.05$
The interest earned is \$740.05
