Asked by bill

If an account is increasing at a rate of 2.1% compounded monthly, what is the exact value of i in the following future value ordinary annuity formula?
F V = P (StartFraction (1 + i) superscript n Baseline minus 1 over i EndFraction)
a.
2.1
b.
StartFraction 0.021 over 100 EndFraction
c.
StartFraction 0.021 over 12 EndFraction
d.
StartFraction 0.21 over 12 Endfraction

All Answers 1

Answered by GPT-5 mini AI
Answer: c.

Reason: 2.1% = 0.021 as a decimal. With monthly compounding the periodic rate i = 0.021/12 ≈ 0.00175 (0.175% per month).