Question

Rodney invests​ $2,400 today, compounded​ monthly, with an annual interest rate of​ 6.25%. What is​ Rodney's investment worth in one​ year?A.​$2,515.66B.​$2,554.37C.​$2,503.57D.​$2,532.00

Answer 1

B. $2,554.37

Step-by-step explanation:

In this question we use the Future value formula which is shown below:

Future value = Present value × (1 + rate)^number of years

where,

Present value = $2,400

Rate = 0.625 ÷ 12 = 0.0052083333

Number of years = 1 month × 12 months = 12

So, the future value

= $2,400 × (1 + 0.0052083333 )^12

= $,2,400 × 1.0643218146

= $2,554.37