Question

Teresa is investing $20,000 in an account with 4.3% interest rate that is compounded monthly. How much money will she have if she takes her money out after 8 years?

Answer 1

Teresa will have $28,200 if she takes her money out after 8 years.

Explanation:

To be able to find the answer, you have to use the formula to calculate the future value:

FV=PV(1+i/n)^(n*t)

FV=future value

PV=present value= $20,000

i=interest rate= 0.043

n=number of compounding periods per time unit= 12

t=time in years= 8

Now, you can replace the values on the formula:

FV=20,000*(1+(0.043/12)^(12*8)

FV=20,000*1.41

FV=28,200

According to this, the answer is that Teresa will have $28,200 if she takes her money out after 8 years.