Question

In: Statistics and Probability

Kyle invested $15,000 in a savings account. If the interest rate is 5% per year, how...

Kyle invested $15,000 in a savings account. If the interest rate is 5% per year, how much will be in the account in 10 years
for monthly compounding?
Round your answer to the nearest cent.
Do NOT round until you calculate the final answer
Provide your answer below:

Solutions

Expert Solution

The present value is PV=15000, the yearly interest rate is r=0.05. The total number of years is n=10, and the compounding is done monthly.

Hence, the future value after 10 years (the number of compounding periods is 12×10=120 ) is calculated using the following formula:

which means that the future value for a present value of PV=15000, for a yearly interest rate of r=0.05, n=10 years, and with monthly compounding is

Let me know in the comments if anything is not clear. I will reply ASAP! Please do upvote if satisfied!

orchestra answered 2 years ago
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