Question

Geraldine invests $2,500 in a retirement account with a fixed annual interest rate of 9.5% compounded

every month. What will the account balance be after 15 years?

Answer 1

FV= $10,342.64

Explanation:

Giving the following information:

Initial Investment (PV)= $2,500

Interest rate (i)= 0.095/12= 0.00792

Number of periods (n)= 15*12= 180

To calculate the future value (FV), we need to use the following formula:

FV= PV*(1 + i)^n

FV= 2,500*(1.00792^180)

FV= $10,342.64