Question

If you deposit $1000 per month into an account which pays interest at a rate of 12% per year compounding monthly, the amount of money you would have at the end of five years.

a) Compound interest formula
b) Future value calculation
c) Present value computation
d) Annual percentage rate determination

Answer 1

To calculate the amount of money you would have at the end of five years with monthly deposits, use the future value formula.

Step-by-step explanation:

To calculate the amount of money you would have at the end of five years with monthly deposits of $1000 and an interest rate of 12% compounded monthly, you can use the future value formula. The formula is:

Future Value = P * (1 + r/n)^(nt)

Where:

• P is the monthly deposit ($1000)
• r is the annual interest rate (12% or 0.12)
• n is the number of times the interest is compounded per year (12 times for monthly compounding)
• t is the number of years (5 years)

Plug in the values into the formula and calculate to find the future value.

The result will be the amount of money you would have at the end of five years.