Calculating Interest and Balances

The video tutorial explains how to calculate monthly compounded interest on an initial investment of $5,000 with an annual interest rate of 6%, equivalent to 0.5% monthly. It demonstrates the step-by-step process of calculating interest for each month, updating the balance, and understanding the concept of compound interest. The tutorial covers calculations for five months, emphasizing rounding to the nearest cent and using a calculator for accuracy.

What is the initial investment amount in the account?

• $4,000

• $6,000

• $7,000

• $5,000

What is the monthly interest rate applied to the account?

• 0.7%

• 0.6%

• 0.5%

• 0.4%

How much interest is earned during the first month?

• $35

• $30

• $20

• $25

What is the ending balance after the first month?

• $5,030

• $5,035

• $5,020

• $5,025

How much interest is earned during the second month?

• $25.15

• $25.13

• $25.10

• $25.18

What is the ending balance after the second month?

• $5,050.13

• $5,045.13

• $5,055.13

• $5,060.13

How much interest is earned during the third month?

• $25.20

• $25.25

• $25.22

• $25.28

What is the ending balance after the third month?

• $5,085.38

• $5,080.38

• $5,075.38

• $5,070.38

How much interest is earned during the fourth month?

• $25.33

• $25.35

• $25.38

• $25.30

What is the ending balance after the fifth month?

• $5,105.76

• $5,115.76

• $5,100.76

• $5,110.76