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Bess [88]
3 years ago
9

Suppose an investor deposits $5,000 in an interest-bearing account at her local bank. The account pays 2.5% (annual) with intere

st compounded monthly. If the investor plans on withdrawing the original principal plus accumulated interest at the end of ten years, what is the total amount that she should expect to receive assuming interest rates do not change
Business
1 answer:
dlinn [17]3 years ago
4 0

Answer:

FV= $6,418.20

Explanation:

Giving the following information:

Initial investment (PV)= $5,000

Interest rate (i)= 0.025/12= 0.002083

Number of periods (n)= 10*12= 120 months

<u>To calculate the future value (FV), we need to use the following formula:</u>

FV= PV*(1 + i)^n

FV= 5,000*(1.002083^120)

FV= $6,418.20

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