Question 1127645: Use the compound interest formula P = A(1 + i)^n, where A is the original value of an investment, i is the interest rate per compounding period, n is the total number of compounding periods, and P is the value of the investment after n periods.
A financial advisor recommends that a client deposit $2600 into a fund that earns 7.5% annual interest compounded monthly. What will be the value of the investment after 3 years? Round to the nearest cent.
Answer by greenestamps(13200)   (Show Source):
You can put this solution on YOUR website!
You are given the formula; just plug in the numbers. Your calculator will give the same answer as mine.
Pay close attention to the exact wording.
>> 7.5%, or .075, is the annual interest rate; since interest is compounded monthly, the interest rate per period is .075/12 = .00625.
>> Since n is the number of compounding periods, n is the number of months in 3 years.
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