Question

On August 8, 1981, American Savings offered an insured tax-free account paying 23.24% compounded monthly. If you had invested $90,000 at that time, how much would you have on August 8, 2014, assuming that you could have locked the interest rate at the time of deposit? Someone please help me!!

Answer 1

Answer:

$181,432,754

Step-by-step explanation:

We use the formula for compound interest here, to determine the amount

Mathematically, that would be;

A =I (1 + r/n)^nt

where A is the amount which we want to calculate

I is the initial amount which is $90,000

r is the rate = 23.24% = 23.24/100 = 0.2324

n is the number of times per year the interest is compounded = 12 (compounded monthly)

t is the number of years = 2014 - 1981 = 33

Substituting these values, we have;

A = 90,000(1 + 0.2324/12)^(33 * 12)

A = 90,000(1 + 0.0194)^396

A = 90,000(1.0194)^396

A = 181,432,754.27210504

Which is approximately $181,432,754 to the nearest whole dollars