lp QUESTION 20 How much will S20 000 invested today at 3 ann

lp QUESTION 20 How much will S20 000 invested today at 3% annually compounded monthly be worth in 5 years? Do not include the dollar sign

Solution

r = 3% / 12 Months = 0.25% per month

n = 5 x 12 Months = 60 Periods

Future value = Present Value x Future Value Factor

= Present Value x [1+r]ⁿ

= $20,000 x [ 1.0025] ⁶⁰

= $20,000 x 1.16161678

= $23,232.34 or

= $23,232 [Rounded to 0 Decimal Place]