Problema Solution
How much money would Manny have if he invested $1,200 at an interest rate of 5% for 7 years compounded monthly (12 times a year)?
Answer provided by our tutors
let
P = $1,200 the principal invested
r = 0.05 or 5% annual interest rate
t = 7 years
n = 12*t = 12*7 = 84 compounding periods (the account is compounded monthly)
A = future value
A = P(1 + r/12)^n
A = 1200(1 + 0.05/12)^84
A = $1,701.64
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Manny will have $1,701.64.