Question

Suppose that

$ 5,700

is invested at

5.3 %

annual interest rate, compounded monthly. How much money will be in the account in  

6 months?

24 years?

Answer 1

We as asked to calculate Future Value for two different time periods:

Future value = Money in account after specified years = ? ; Present Value = $5700 ; Rate = 5.3%

a.

For 6 months ; N = 6 months = 0.5 years = 0.5

Future Value = Present Value x (1 + Rate/12)^(N x 12)

Future Value = 5700 x (1 + 5.3%/12)^(0.5 x 12)

Future Value = $5,852.73

b.

For 6 months; N = 24 years = 24

Future Value = Present Value x (1 + Rate/12)^(N x 12)

Future Value = 5700 x (1 + 5.3%/12)^(24 x 12)

Future Value = $20,280.61