Question

Calculate the future value of an investment of $2300, after 7 months, earning 6.6% APR, compounded monthly, by compounding manually.

Answer 1

The future value of an investment, P after n years at an APR of r% compounded t times a year is given by

`FV=P\left(1+ (r)/(t) \right)^(nt)`

Given an investment of $2300, after 7 months, earning 6.6% APR, compounded monthly, the future value is given by

`FV=2,300\left(1+ (0.066)/(12) \right)^{12\left( (7)/(12)\right) } \\ \\ =2,300(1+0.0055)^7=2,300(1.0055)^7 \\ \\ =2,300*1.03914=\$2,390.02`