Fatoumata deposits dollar sign, 110$110 every month into an account earning a monthly interest rate of 0.45%. How much would she have in the account after 11 years, to the nearest dollar? Use the following formula to determine your answer.
A, equals, d, left bracket, start fraction, left bracket, 1, plus, i, right bracket, to the power n , minus, 1, divided by, i, end fraction, right bracket
A=d(
i
(1+i)
n
−1
)
A, equalsA= the future value of the account after n periods
d, equalsd= the amount invested at the end of each period
i, equalsi= the interest rate per period
n, equalsn= the number of periods
In this case,
d = 110$
i = 0.45% = 0.0045 (since it is a monthly rate)
n = 11 years = 132 months
Plugging in the values into the formula:
A = 110$ ((0.0045) ((1+0.0045)^132 - 1) / 0.0045)
A = 110$ ((0.0045) ((1.0045)^132 - 1) / 0.0045)
A = 110$ (0.0045 (1.68585265129 - 1) / 0.0045)
A = 110$ (0.0045 * 0.68585265129)
A = 110$ (0.003086337981)
A = 339.49717791
Therefore, Fatoumata would have approximately 339$ in the account after 11 years.