4.16 A bank pays interest at the rate of 12% per year, compounded monthly. If a man deposits
$3000 in the bank and leaves it for 5 years, how much money wi11 accumulate, according to (a)
(2.1)? (b) Appendix A? Ans. (a) $5450.09; (b) $5450.10
Solution
Answer:(a) $5450.09
Money will accumulate=A(1+r)n
A=$3000
r=12%/12=1% per month
n=5 years*12 months=60 months
Money will accumulate=$3000(1+0.01)60
=$5450.09
$3000 in the bank and leaves it for 5 years, how much money wi11 accumulate, according to (a)
(2.1)? (b) Appendix A? Ans. (a) $5450.09; (b) $5450.10
Solution
Answer:(a) $5450.09
Money will accumulate=A(1+r)n
A=$3000
r=12%/12=1% per month
n=5 years*12 months=60 months
Money will accumulate=$3000(1+0.01)60
=$5450.09
