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Interest rate formula

Can you please tell me the actual formula?
q5.JPGscreenshot.jpg
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mustish1
Asked:
mustish1
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2 Solutions
 
AnthonyHamonCommented:
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mustish1Author Commented:
A = P(1+r/n)^nt
P=3800
r=5.4
t=8

what is n?
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AnthonyHamonCommented:
n is the number of times that interest is compounded per year.  So in your case this is 12 because the question states that interest is compounded monthly.
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KaffiendCommented:
You can google for the formula, you know.

The second solution is VERY wrong, btw.
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mustish1Author Commented:
It looks like different the way it solve above.

A = P(1+r/n)^nt
P=3800
r=5.4
t=8
n=12

A=3800(1+5.4/12)12*8
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AnthonyHamonCommented:
t is not 8 - that would be 8 years.  For 8 months it is 8/12 or 0.666667
r is not 5.4 - that would be 540%.  For 5.4% it is 0.054

So you get:
A=3800(1+0.054/12)^(12*0.666667)
A=3800(1.0045)^(8)
A=3800(1.036572)
A=3938.83
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mustish1Author Commented:
Thank You.
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