Question

You put $5000 in an investment that pays an interest compounded monthly. The yearly interest in year 1 through year 6 are: 10.5%, 10.5%, 11%, 11%, 11.5%, and 11.5%. After 5 years, the investment will be worth $ NOTE: Use at least 4 decimal places. Use negative sign when necessary. No commas.

Answer 1

After 5 years the investment will be $8601.83

Explanation:

given data

amount = $5000

time 6 years total

rate 1 =10.5%

rate 2 =10.5%

rate 3 =11%

rate 4 = 11%

rate 5 =11.5%

rate 6 =11.5%

to find out

After 5 years the investment will be

solution

we know compounded monthly interest formula that is

principal = amount
`(1+rate/12)^(12)` .............1

for 1st year put rate1 and find principal that principal will be used in next year as a amount

so

principal = amount
`(1+rate/12)^(12)`

principal 1 = 5000
`(1+0.105/12)^(12)`

principal 1 = $5551.0173

now

principal 2 = amount
`(1+rate/12)^(12)`

principal 2 = 5551.0173
`(1+0.105/12)^(12)`

principal 2 = $6162.7585

and

principal 3 = amount
`(1+rate/12)^(12)`

principal 3 = 6162.7585
`(1+0.11/12)^(12)`

principal 3 = $6875.9057

and

principal 4 = amount
`(1+rate/12)^(12)`

principal 4 = 6875.9057
`(1+0.11/12)^(12)`

principal 4 = $7671.5776

and

principal 5 = amount
`(1+rate/12)^(12)`

principal 5 = 7671.5776
`(1+0.115/12)^(12)`

principal 5 = $8601.8279

After 5 years the investment will be $8601.83