Question

Find the value of $17,000 invested in a mutual fund that earned an annual

percentage rate of 6. 5%, compounded monthly, for 8 years.

Answer 1

$28,554.37

Explanation:

To solve this problem, lets use the compound interest formula:

`A=P(1+(r)/(n) )^(nt)`

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First, change 6.5% into a decimal:

6.5% ->
`(6.5)/(100)` -> 0.065

Since the interest is compounded monthly, we will use 12 for n. Lets plug in the values now:

`A=17,000(1+(0.065)/(12))^(12(8))`

`A=28,554.37`

The value of the mutual fund after 8 years is $28,554.37