Jill just opened a savings account with Santander Bank anddeposited $2,000 into it. The account...

Jill just opened a savings account with Santander Bank and deposited $2,000 into it. The account pays an annual nominal interest of 1%, but interest is compounded every month. If Jill does not make any future deposits or withdrawals, what will her account balance be after 5 years (ignore all service charges and taxes)?

Expert Solution

Annual nominal rate = 1 %

monthly interest rate = 1% / 12 = 0.0833%

Number of periods = 5 years * 12 months = 60 months

Particulars	Amount
Present Value	$ 2,000.00
Int Rate	0.0833%
Periods	60

Future Value = Present Value * ( 1 + r )^n
= $ 2000 ( 1 + 0.000833) ^ 60
= $ 2000 ( 1.000833 ^ 60)
= $ 2000 * 1.0512
= $ 2102.5
Jill will have in her account after 5 years is $ 2102.5

jeff jeffy answered 2 years ago

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