Question

A couple deposits $20,000 into an account earning 5% annual interest for 30 years. Calculate the future value of the investment if the interest is compounded monthly. Round your answer to the nearest cent.

Answer 1

The future value of the investment if the interest is compounded monthly is $89,354.89.

What is the future value of the investment?

Given that;

• Principal P = $20,000
• Annual interest rate r = 5% = 5/100 = 0.05
• Time t = 30 years
• Compound monthly = 12
• Future value = A = ?

Using the compound interest formula;

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

We plug in our values.

A = 20000( 1 + 0.05/12 )^(12 × 30)

A = 20000( 1 + 0.0041666666666667)^(360)

A = 20000( 1.0041666666666667)^(360)

A = 20000( 4.46774965 )

A = 89354.89

Therefore, the future value of the investment if the interest is compounded monthly is $89,354.89.

Learn more about compound interest here: brainly.com/question/21270833

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