Question

If $240 is invested at an interest rate of 9% per year and is compounded monthly, how much will the investment be worth in 14 years?

Answer 1

Answer:

$842.13.

Step-by-step explanation:

We have been given that $240 is invested at an interest rate of 9% per year and is compounded monthly. We are asked to find the value of investment after 14 years.

We will use compound interest formula to solve our given problem.

$A=P(1+\frac{r}{n})^{nT}$, where,

A = Final amount after T years,

P = Principal amount,

r = Annual interest rate in decimal form,

n = Number of times interest is compounded per year,

T = Time in years.

$r=9\%=\frac{9}{100}=0.09$

$A=\ 240(1+\frac{0.09}{12})^{12*14}$

$A=\ 240(1+0.0075)^{168}$

$A=\ 240(1.0075)^{168}$

$A=\ 240*3.508885595$

$A=\ 842.1325428$

$A\approx \ 842.13$

Therefore, the investment will be worth $842.13 in 14 years.

Answer 2

FV=(240)[1+(0.09/12)]^(12*14]

=(240)[1+0.0075]^168

=(240)(3.5088855954842)

=$842.13  ( answer )