Calculate the accumulated value of $1000.00 at 8% compounded monthly for 12 years.
A) $2603.39
B) $1603.39
C) $2600.39
D) $2003.39
E) $603.39

Question

Quizplus · Accepted Answer

We use the formula $A=P\left(1+\frac{r}{n}\right)^{nt}$ where A is the accumulated value, P is the principal (initial amount), r is the annual interest rate (as a decimal), n is the number of times the interest is compounded per year, and t is the time (in years). Plugging in the values given, we get $A=1000\left(1+\frac{0.08}{12}\right)^{(12)(12)}\approx2603.39$. Choice A matches this value, so it is the best choice.

Calculate the Accumulated Value of $1000