Question

Maria had $3,500 and invested it into an account with an annual

interest rate of 1.2%. If her investment were compounded monthly,
write an eqaution to find the value of her investment after t years.

Answer 1

FV= $3,716.32

Explanation:

Giving the following information:

Initial investment (PV)= $3,500

Interest rate (i)= 1.2% compounded monthly

First, we need to determine the monthly nominal interest rate:

Monthly interest rate= 0.012/12= 0.001

Now, to calculate the future value after 't' months, we need to use the following formula:

FV= PV*(1 + i)^t

For example, for 60 months:

FV= 3,500*(1.001^60)

FV= $3,716.32