Question

he company "Xerta" has opened an economy account at a bank and made a deposit of 14 mil. euro. The bank will pay 7% percentage annually on the amount accumulated in the economy account. Given the fact that the interest will be capitalized (compounded) monthly what will be the accumulated amount in that account after 2 years?

The result will be expressed rounded with two decimals (eg: 44.45)

Answer 1

Sol:

Deposit value (P) = 14 million euro

Interest rate (r) = 7% annually

n = 12 months (the number of times that interest is compounded per unit t)

t = 2 years (the time the money is invested or borrowed for)

To determine accumulated amount (A) in that account after 2 years:

A = P x (1 + r/n)^(nt)

A = 14 million x (1 + 7%/12)^12 x 2

A = 14 million x (1 + 0.07/12)^24

A = 14 million x (1.005833)^24

A = 14 million x 1.149806

A = 16.10 million euro

Therefore amount accumulated in that account after 2 years will be 16.10 million euro