To answer this question we will use the following formula for compounded monthly interest:
[tex]A=A_0(1+\frac{r}{12})^{12t},[/tex]where A₀ is the initial amount, r is the annual interest as a decimal number and 12 is the number of years.
Notice that:
[tex]60-18=42.[/tex]Therefore, substituting t=42, r=0.02, and A₀=120000 we get:
[tex]A=120000(1+\frac{0.02}{12})^{12\cdot42}\text{.}[/tex]Simplifying the above result we get:
[tex]\begin{gathered} A=120000(1.001\bar{6})^{504} \\ \approx120000\cdot2.314747889 \\ \approx277769.75 \end{gathered}[/tex]Answer: $277,769.75.
