SOLUTION: You decide to invest a $15000 bonus in a money market fund that guarantees a 5.5% annual percentage rate compounded monthly for 5 years. A one-time fee of $25 is charged to set up

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Question 1058658: You decide to invest a $15000 bonus in a money market fund that guarantees a 5.5% annual percentage rate compounded monthly for 5 years. A one-time fee of $25 is charged to set up the account. In addition there is an annual administrative charge of 1.25% of the balance in the account at the end of each year. (i) How much is in the account at the end of the first year? (ii) How much is in the account at the end of the fifth year? Please show work.
14975(1+.055/12)^12x5
I have answer for first year, but can't figure out formula for the 5 years with the 1.25%
Answer by josmiceli(19441) About Me  (Show Source):
You can put this solution on YOUR website!
I think the 1.25% is a compounded loss, so
you would subtract it from the 5.5% in the
formula.
After the 1st yr:
+A+=+15000%2A%28+1+%2B+%28+.055+-+.0125+%29%29%5E1+
+A+=+15000%2A1.0425%5E1+
+A+=+15637.5+
$15,637.50 after the 1st yr is in account
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After the 5th yr:
+A+=+15000%2A1.0425%5E5+
+A+=+15000%2A1.23135+
+A+=+18470.20+
$18,470.20 after the 5th yr is in account
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I'm not 100% sure -get another opinion if you can.