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v1 Financial Maths, STD2 F4 2023 HSC 10 MC

An amount of $18 000 is invested for five years. Interest is earned at a rate of 6% per annum, compounding monthly.

Which expression gives the value of the investment after 5 years, in dollars?

  1. `18\ 000 xx 1.005^{60}`
  2. `18\ 000 xx 1.06^{5}`
  3. `18\ 000 xx 1.005^{5}`
  4. `18\ 000 xx 1.06^{60}`
Show Answers Only

`A`

Show Worked Solution

`text{Interest rate}\ = 6/12=0.5%\ text{per month}`

`text{Compounding periods}\ = 5xx12=60`

`:.FV=18\ 000 xx 1.005^{60}`

`=>A`