00:01
All right, we have $2 ,400 that's invested at 5 % annual interest, and it is compounded monthly, and we want to come up with an equation and model this situation and then calculate how much money is in the account after three years.
00:26
The formula that we want to use is a of t equals a sub -0 times 1 plus r divided by n to the n times.
00:37
Times t power.
00:39
So a -0 represents your principal investment, your principal amount.
00:44
R is your annual interest rate.
00:46
We're going to convert that from a percent to a decimal.
00:49
N is a number of times that you're compounding per year.
00:51
So monthly, n is 12, and then t is a number of years.
00:56
All right, so we'll say a of t is 2 ,400 times 1 plus 0 .05 divided by 12 to the 12t.
01:13
All right.
01:13
So then a of three, we're going to substitute three in for t.
01:18
So 2 ,400 times 1 plus 0 .05 divided by 12.
01:25
All right.
01:26
When we take that 0 .05 divided by 12, we're converting from an annual interest rate to a monthly interest rate...