Question

Since 2007, a particular fund returned 13.3% compounded monthly. How much would a $4000 investment in this fund have been worth after 2 years? (Round your answer to the nearest cent.)

Answer 1

$5,211.30

Explanation:

We have to calculate compound interest with the formula
`A=P(1+(r)/(n))^(nt)`

Where A = Amount after maturity

P = Principal amount ( $4,000)

r = Rate of interest 13.3% in decimal ( 0.133)

n = number of compounding period, monthly ( 12 )

t = Time in years ( 2 )

Now we put the values in the formula

`A=4,000(1+(0.133)/(12))^((12* 2))`

`A=4,000(1+0.0110833)^((24))`

`A=4,000* 1.0110833^(24)`

`A=4,000* 1.3028262297`

A = $5,211.30

After 2 years investment would be $5,211.30.