Financial contracts involving investments, mortgages, loans, and so on are based on either a fixed or a variable interest rate. Assume that fixed interest rates are used throughout this question. Addison deposited $1,000 in a savings account at her bank. Her account will earn an annual simple interest rate of 5.8%. If she makes no additional deposits or withdrawals, how much money will she have in her account in 9 years?

Question

Jonathan Henry

Business

13 February, 05:05

Financial contracts involving investments, mortgages, loans, and so on are based on either a fixed or a variable interest rate. Assume that fixed interest rates are used throughout this question. Addison deposited $1,000 in a savings account at her bank. Her account will earn an annual simple interest rate of 5.8%. If she makes no additional deposits or withdrawals, how much money will she have in her account in 9 years?

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Answers (1)

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Bruce Blackburn · Answer 1

FV = $1661

Explanation:

Giving the following information we need to calculate the money at the final:

PV = $1000

i=0,058

n=9 years.

We need to use the following formula:

FV = PV*[ (1+i) ^n]

In this exercise:

FV = 1000*[ (1+0,058) ^9]

FV = $1661

At the end of year 9, she will have $1661