Question

Congratulations! You were the 10th caller on the KMTH morning show and you just won $3,000.00. After you calm down, you decide to put the money into a bank account so that you will have even more money for a trip to Europe. Snurling Bank tells you that they will pay 9% per year compounded monthly. How much money will you have for your trip in 5 years

Answer 1

$4,697.04

Step-by-step explanation:

In simple words , this question requires us to find the Future Value in 5 years time. We compound the Present Value using the effective interest rate to determine the Future Value of an investment.

PV = $3,000.00

P/YR = 12

N = 5 x 12 = 60

I = 9 %

PMT = $0

FV = ?

Using a Financial calculator to enter the parameters as above the Future Value (FV) is $4,697.04

therefore,

In 5 years time, you will have $4,697.04.