Answer:
The amount after 10 years will be $5963.33
Explanation:
The formula for compound interest is:
[tex]A=P(1+\frac{r}{n})^{nt}[/tex]Where:
P is the initial amount deposited
r is the rate of compounding, in decimal
n is the number of times interest is compounded for every unit of t
t is the time
In this case:
P = $4000
r is given in percentage. We need to divide by 100 in order to convert it to decimal:
[tex]r=\frac{4}{100}=0.04[/tex]Since this is compounded monthly, is compounded twelve times every year. Thus n = 12
And we want to know the amount after 10 years, thus t = 10
We can write now:
[tex]A=4000(1+\frac{0.04}{12})^{12\cdot10}[/tex]We can solve:
[tex]A=4000\cdot\frac{301}{300}^{120}=5963.33073[/tex]To the nearest cent, A = $5963.33