# Option 1 Invest \$5,000 in a savings account at 6.6% interest compounded monthly. compound interest Option 1 amount earned at the end of 6 years It is Business Algebra

## Expert Answers All you are trying to do here is to find what you get by investing at compound interest.  The formula for compound interest is

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

In this formula, A is the amount of money you have after t years.  P is the original amount of money invested, r is the annual interest rate expressed as a decimal and n is the number of times interest is compounded each year.

So now plug in the numbers that you have provided.

A = 5000(1+.066/12)^12*6

If you do the math correctly you will come out with \$7421.29.  So your original \$5000 investment will become \$7421.29, which means that you earned \$2421.29 in interest during the 6 years.

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