Problema Solution

A young man is the beneficiary of a trust fund established for him 25 yr ago at his birth. If the original amount placed in trust was $40,000, how much will he receive if the money has earned interest at the rate of 9%/year compounded annually? Compounded quarterly? Compounded monthly?

Answer provided by our tutors

1. when money compounded annually=40000*(1+0.09)^25=$344923.23

1. when money compounded annually=40000*(1+0.09/4)^(25*4)=$370161.85