Question

Sophia invests $6,100 in a retirement account with a fixed annual interest rate of 3% compounded monthly. What will the account balance be after 12 years?

Answer 1

FV= $8,739.38

Explanation:

Giving the following information:

Initial investment (PV)= $6,100

Number of periods (n)= 12*12= 144

Interest rate (i)= 0.03/12= 0.0025

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

FV= PV*(1 + i)^n

FV= 6,100*(1.0025^144)

FV= $8,739.38