Question

The value of a savings account is increasing at a rate of 4.7% interest compounded monthly during each year. Find the ending value of $2,000 invested in this account for 21 years.

A. $5,356.01
B. $5,218.22
C. $6,281.33
D. $4,721.36

Answer 1

The ending value of $2,000 invested in a savings account for 21 years with a 4.7% interest compounded monthly is approximately $5,218.22.

Step-by-step explanation:

To find the ending value of $2,000 invested in a savings account for 21 years with a 4.7% interest compounded monthly, we can use the compound interest formula:

Ending Value = Principal x (1 + (Rate/100))^(N)

Where:

• Principal = $2,000
• Rate = 4.7%
• N = 21 years x 12 months per year = 252 months

Plugging in these values into the formula, we get:

Ending Value = $2,000 x (1 + (4.7/100))^(252)

Simplifying this gives us an ending value of approximately $5,218.22.

Therefore, the correct answer is B. $5,218.22.