A small telecommunications company invested its 2010 net income of $443,400 in a
savings account for 3 years and 4 months. Money was earning interest at a rate of
5.75% compounded monthly.
a. Calculate the amount it would have in this account at the end of the period.
Answer:
The company will have $536,829.87 at the end of the period.
Step-by-step explanation:
Use the formula for compound interest.
“P” is the initial investment.
“r” is the rate in decimal form.
“n” is the number of compounding periods in a year.
A = P(1 + r/n)^(total number of compounding periods)
A = 443,400 (1 + 0.0575/12)^(3*12 + 4)
A = 443,400 (1.00479166667)^(40)
A = 536,829.867619
A = 536,829.87