Question

Suppose you currently have $5,000 in your savings account, and your bank pays interest at a rate of 0.5% per month. If you n how much will you have in the account in 5 years? In 5 years' time, you will have $ in the account. (Round to the nearest cent.)

Answer 1

Single Payment Compound Amount Factor(SPCAF)=(F/P,i,N)=(1+i)^N

i=interest rate per Monthly period =0.5%=0.005

N=Number of Monthly period =5*12=60

SPCAF=(F/P,0.5%,60)=(1+0.005)^60=1.34885

Amount in account in 5 years time =$5,000*SPCAF=5000*1.34885=$6,744.25

In 5 years time, you will have

$6,744.25

in your account