Problema Solution
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 provided by our tutors
P = $240 the principal
t = 14 years
r = 0.09 or 9% annual rate
m = 12 compounding period per year
i = 0.09/12 interest rate per period
n = 14*12 = 168 total number of compounding periods
A = future value
A = P(1 + i)^n
A = 240(1 + 0.09/12)^168
by solving we find
A = $842.13
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after 14 years the investment will be $842.13 worth.