Question

Michael puts $600 in a savings account that increases with a 5.25% interest compounded annually. Write a function that represents the amount of money in Michael's account and find how much money will Michael have in his account after 6 years if there are no withdrawals or deposits. Round to the nearest cent.

Answer 1

Answer:

FV = PV (1 + r) ^ n and $815.61

Explanation:

The amount of cash which will have accrued by a given date resulting from earlier single sum or period investments is known as the Future Value (FV) and represented by the following function :

FV = PV (1 + r) ^ n

where,

PV = Principle amount

r = interest rate

n = number of periods for which investment is to receive interest

Using the Function we can determine the amount Michael have in his account after 6 years :

FV = PV (1 + r) ^ n

     = $600 x (1.0525) ^6

     = $815.61