Problema Solution
Grace deposits $1,000 in a mutual fund earning 9.5% annual interest compounded monthly. What will she make in 5, 10, 15, 20, 25 and 30 years.
Answer provided by our tutors
P = $1,000 the principal
r = 0.095 or 9.5% annual rate
m = 12 compounding period per year
i = 0.095/12 interest rate per period
t = the number of years
n = t*12 = 168 total number of compounding periods
A = future value
A = P(1 + i)^n
For t = 5 years
n = 5*12 = 60
A = 1000(1 + 0.095/12)^60
A = $1,605.01
click here to see the step by step calculation
in 5 years Grace will have $1,605.01
For t = 10 years
n = 10*12 = 120
A = 1000(1 + 0.095/12)^120
A = $2,576.06
click here to see the step by step calculation
in 10 years Grace will have $2,576.06.
in 15 years Grace will have $4,134.6.
click here to see the step by step calculation
in 20 years Grace will have $6,636.07.
click here to see the step by step calculation
in 25 years Grace will have $10,650.95.
click here to see the step by step calculation
in 30 years Grace will have $17,094.88.
click here to see the step by step calculation