Question

Assume that you deposited $1000 in a bank that offers you 12% annual interest rate. If the bank compounds the interest rate monthly, the amount of money you find in your account in the 5^th year is

Answer 1

Amount Deposited in Bank(Invested Amount) = $1000

Interest Rate offered bt=y bank = 12% compounded monthly

Calculating the Amount of money in account in 5th year:-

Where, Invested AMount = $1000

r = Periodic Interest rate = 2%

n= no of periods = 5

m = no of times compounding in a year = 12

Future Value = $1000*1.81669669856

Future Value = $1816.70

So, amount in account in 5th year is $1816.70

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