Question

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

Answer 1

Answer:

$28,554.37

Step-by-step explanation:

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

$A=P(1+\frac{r}{n} )^{nt}$

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First, change 6.5% into a decimal:

6.5% -> $\frac{6.5}{100}$ -> 0.065

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

$A=17,000(1+\frac{0.065}{12})^{12(8)}$

$A=28,554.37$

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