Problem: In order to pay for college, the parents of a small child invest $20,000 in a savings bond that pays 8% interest compounded monthly. Find the future value of the investment after 16 years.
NOTE: The formula and the explanation of each letter used in the formula is found below.
Solution: We use the compound interest formula where we have P = 20,000, r = .08, n = 12, and t = 16.
The required keypresses and result are as follows:
The future value of the investment is $71,627.89
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