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18 June, 11:33

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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  1. 18 June, 15:01
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    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
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