Question

The principal amount of money for this loan is $9,500.00. If you deposit this into an account paying 4.2% annual interest compounded monthly. How much money will be in the account after 5 years? (also called Future value).

Answer 1

9514 1404 393

Answer:

$11,715.65

Explanation:

The applicable formula is ...

FV = P(1 +r/n)^(nt)

where principal P earns interest at rate r compounded n times per year for t years.

FV = $9500(1 +0.042/12)^(12·5) = $9500(1.0035^60) ≈ $11,715.65

The account will hold $11,715.65 after 5 years.