Question

While searching Ancestry.com, you learn that you are a direct descendant and sole living heir of Alexander Hamilton who founded the Bank of New York 235 years ago. FYI - his picture is on the US ten dollar bill.
Mr. Hamilton had coincidently deposited $10 in the newly founded bank and you are the sole beneficiary of the account, which earned 5% annualized interest compounded monthly.

Assuming no deposits or withdrawals were made on the account, what is the account's approximate current value?

A. $954,000
B. $124,000
C. $1.24 million
D. $95,400
E. $128

Answer 1

Answer:

C. $1.24 million

Explanation:

Given that

Annualized interest compounded = 5%

For monthly, it would be = 5% ÷ 12 months = 0.4167%

Time = 235 years

For monthly, it would be = 235 years × 12 months = 2,820

Present value = $10

We know that

Future value = Present value × (1 + interest rate)^number of years

                     = $10 × (1 + 0.4167%)^2820

After solving this, the answer would be  $1.24 million