To calculate the future value of the principal when compounded monthly, we use the formula:
FV = P(1 + r/n)^(nt)
Where:
FV = future value
P = principal
r = interest rate (in decimal form)
n = number of times compounded per year
t = number of years
In this case, P = $1,400, r = 7% or 0.07, n = 12 (compounded monthly), and t = 22.
FV = $1,400(1 + 0.07/12)^(12*22)
FV ≈ $1,400(1.00583333333)^(264)
FV ≈ $1,400(5.9278875187294877579711323834643)
FV ≈ $8,299.04
Therefore, the correct answer is not listed among the given options.
$1,400 principal earning 7%, compounded monthly, after 22 years
a
$395,472.00
b
$6,202.56
c
$6,501.27
d
$1,591.11
1 answer
1 answer