Question

Question 2
Suppose you put $5,000 in a savings account with an annual interest rate of 3%
compounded monthly for three years. What is the future value of this investment?
$5,280
$5,440
$5,470
$5,415

Answer 1

Answer:

5470

Step-by-step explanation:

$5000(1+\frac{.03}{12})^{12*3}=5470.257$

Answer 2

The future value of the investment in the savings account with montly compounding is $5470.

What is the future value?

When an investment is compouded monthly, it means that it increases in value every month.

The formula for calculating future value:

FV = P (1 + r)^nm

• FV = Future value
• P = Present value
• R = interest rate = 3%/12
• m = number of compounding = 12
• N = number of years

5000 x ( 1.0025)^36 = $5470

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