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Suppose you could make a single "lump sum" deposit of $7694,
in an investment that provides an Annual Percentage Rate(APR) of 3% compounded monthly.
Determine the Future Value(FV) of the investment after 18 years.
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Future value
f = p*(1 + r)^n
p is the principal amount,
r is the interest rate per time period,
n is the number of time periods.
In your problem:
p = 7694 dollars,
r = 0.03/12 = 0.0025 per month,
n = 12*18 = 216 months.
Formula becomes f = .
Use your calculator to get f = 13,194.06 dollars. ANSWER
Solved.
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To see many other similar (and different) solved problems on compounded interest accounts, look into the lesson
- Compounded interest percentage problems
in this site.
Learn the subject from there.