In: Finance
Victor put $5,000 into a bank account 7 years ago.
How much should have in the account today if the account advertises a 5% APR compounded monthly?
(Round to the nearest cent and do not enter the dollar sign)
Monthly rate = 5% / 12 = 0.416667%
Number of periods = 7 * 12 = 84
Future value = Present value (1 + r)^n
Future value = 5000 (1 + 0.00416667)^84
Future value = 5000 * 1.418036
Future value = 7,090.18
Victor should have 7,090.18