The formula you’ve provided is an example of compound interest:

$A = 10,000 \left( 1 + \frac{0.04}{12} \right)^{60}$

Here:

• $A$ is the amount of money accumulated after $t$ periods, including interest.
• $P = 10,000$ is the principal or initial investment.
• $r = 0.04$ is the annual interest rate (4%).
• The interest is compounded monthly, so $n = 12$ (compounding periods per year).
• The number of periods is $60$, implying a 5-year duration (since $60 = 12 \times 5$).

Let me calculate the final amount $A$.The accumulated amount $A$ after 5 years (60 months) with monthly compounding at a 4% annual interest rate is approximately $12,209.97.

Would you like further details or have any questions about this calculation?

Here are 5 related questions to expand your understanding:

1. What would happen if the interest was compounded annually instead of monthly?
2. How does the time duration (in years) affect the final amount?
3. What if the interest rate were increased to 5%—how would that affect the accumulated value?
4. Can you explain the difference between compound interest and simple interest?
5. How does the frequency of compounding (e.g., quarterly, daily) affect the total amount earned?

Tip: The more frequently interest is compounded, the greater the accumulated amount will be, due to interest being calculated on previously earned interest.