Let's now say we have $50 in a bank account and we deposit an additional $10 per month for 5 years.

Let's now say we have $50 in a bank account and we deposit an additional $10 per month for 5 years. The annual interest rate is 10%, compounded monthly. How much will we have in the account after 5 years rounded to the nearest dollar?

A) $887

B) $692

C) $857

D) $665

Expert Solution

The right option is (c).

Explanation:

number of months (NPER)	60
monthly rate	0.83%
initial investment (PV)	50
monthly payment (PMT)	10
value at the end (FV)	857

=FV(Rate,nper,pmt,pv,type)

Formulae:

number of months (NPER)	=5*12
monthly rate	=10%/12
initial investment (PV)	50
monthly payment (PMT)	10
value at the end (FV)	=FV(B2,B1,-B4,-B3,0)

=FV(Rate,nper,pmt,pv,type)

The right option is (c).

Umair answered 1 year ago

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