Examples of Math Problems: If $1610 is invested in an account which earns 9% interest compounded monthly, which is the future value, to the nearest dollar, at the end of 14 years?

Tuesday, April 30, 2013

If $1610 is invested in an account which earns 9% interest compounded monthly, which is the future value, to the nearest dollar, at the end of 14 years?

Solution:

The future value formula is:
F=P%2A%281%2Br%2Fn%29%5E%28n%2At%29

F=P%2A%281%2Br%2Fn%29%5E%28n%2At%29

and in our case P=$1610, r=0.09, n=12,t=14yrs so...
F=1610%2A%281%2B0.09%2F12%29%5E%2812%2A14%29

F=1610%2A%281%2B0.09%2F12%29%5E%2812%2A14%29

F=5649

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