Question

Ikaros invests $22,000 in a bank at 3.2% interest compoundedamonthly. How much money will he have after 7 years?

Answer 1

The final value of an investment P in a bank at a compound interest of rate r for t years is given by:

`$$FV=P(1+(r)/(m))^(m\cdot t)$$`

Where m is the number of compounding periods per year.

We are given:

P = $22,000

r = 3.2% = 3.2 / 100 = 0.032

t = 7 years

m = 12 (12 months in a year).

Applying the formula:

`FV=\$22,000(1+(0.032)/(12))^(12\cdot7)`

Calculating:

Ikaros will have $27,515 after 7 years