If $800 is deposited at 6% compounded monthly for five years, then find the future value and
the total interest earned.
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The future value of an investment is calculated using the formula:
FV = P * (1 + r/n)^(nt)
where:
FV = future value
P = principal amount (initial investment)
r = annual interest rate (in decimal form)
n = number of times that interest is compounded per year
t = time the money is invested for (in years)
In this case, P = $800, r = 6% = 0.06, n = 12 (since interest is compounded monthly), and t = 5 years.
So, the future value is:
FV = 800 * (1 + 0.06/12)^(12*5)
= 800 * (1 + 0.005)^(60)
= 800 * (1.005)^60
= 800 * 1.34856
= $1078.85
The total interest earned is the future value minus the initial investment:
Interest = FV - P
= 1078.85 - 800
= $278.85
So, the future value of the investment is $1078.85 and the total interest earned is $278.85.
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