Question

In: Finance

If you invest $1,000 today into a deposit account earning 5.75% interest compounded monthly, how much...

If you invest $1,000 today into a deposit account earning 5.75% interest compounded monthly, how much would your investment be worth in 10 years?

Solutions

Expert Solution

A/c balance after 10 years PV×(1+r)^n
Here,
1 Interest rate per annum 5.75%
2 Number of years                                     10
3 Number of compoundings per per annum                                     12
1÷3 Interest rate per period ( r) 0.48%
2×3 Number of periods (n)                                   120
Present value (PV) $                           1,000
A/c balance after 10 years $                     1,774.69
1000*(1+0.48%)^120

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