Question

Since 2007, a particular fund returned 13.3% compounded monthly. How much would a $4000 investment in this fund have been worth after 2 years? (Round your answer to the nearest cent.)

Answer 1

Answer:

$5,211.30

Step-by-step explanation:

We have to calculate compound interest with the formula $A=P(1+\frac{r}{n})^{nt}$

Where A =  Amount after maturity

           P = Principal amount ( $4,000)

           r = Rate of interest 13.3% in decimal ( 0.133)

           n = number of compounding period, monthly ( 12 )

            t = Time in years ( 2 )

Now we put the values in the formula

$A=4,000(1+\frac{0.133}{12})^{(12\times 2)}$

$A=4,000(1+0.0110833)^{(24)}$

$A=4,000\times 1.0110833^{24}$

$A=4,000\times 1.3028262297$

A =  $5,211.30

After 2 years investment would be $5,211.30.