Problema Solution
Lynne invested $500 into an account with a 6.5% intrest rate compounded monthly.How much will lynne's investment be worth in 10 years?
Answer provided by our tutors
P = $500
r = 0.065 or 6.5% annual interest rate
t = 10 years
m = 12 compounding periods per year
i = r/m = 0.065/12 interest rate per period
n = t*m = 10*12 = 120 total number of compounding periods
A = the future value
A = P(1 + i)^n
A = 500(1 + 0.065/12)^120
A = $956.09
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in 10 years Lynne's investment will be worth $956.09.