Final Balance

Question

Ivan Invested $3500 in a mutual fund earning 10.8% compounded monthly for 3 years. What will his be his final balance?

Answer 1

There is the fun way with Excel and then there is the formula.  I will use the formula and then use Excel generated data below.  If time, I will want to use the excel data - update the data with explanations next to it so as to explain the formula.  However, that will take some time to line things up, etc., but if time I would love to do that.  Check back.

 

amt.=3500(1+10.8%/12)^3(12)

 

note 10.8% is divided by 12 because interest is being figured each month.

Annual percentage rate is 10.8%; the monthly percentage rate is 0.9%.

1 + 0.9% is 1.009.

 

in three years there's 36 months

 

amt.= 3500(1.009)^36

 

amt. = 3500(1.3806448731088178909825280587411) = 4832.2570558808626184388482055938

 

Q:?)

 

The following is from Excel:

 

end of yr.0            3500    + 0.009 = 31.5
end of yr.1            3531.5 + 0.009 = 31.7835
end of yr.2       3563.2835 + 0.009 = 32.0695515
end of yr.3    3595.353052 + 0.009 = 32.35817746
end of yr.4    3627.711229 + 0.009 = 32.64940106
end of yr.5      3660.36063 + 0.009 = 32.94324567
end of yr.6     3693.303876 + 0.009 = 33.23973488
end of yr.7     3726.543611 + 0.009 = 33.5388925
end of yr.8     3760.082503 + 0.009 = 33.84074253
end of yr.9     3793.923246 + 0.009 = 34.14530921
end of yr.10   3828.068555 + 0.009 = 34.45261699
end of yr.11   3862.521172 + 0.009 = 34.76269055
end of yr.12   3897.283862 + 0.009 = 35.07555476
end of yr.13   3932.359417 + 0.009 = 35.39123475
end of yr.14   3967.750652 + 0.009 = 35.70975587
end of yr.15   4003.460408 + 0.009 = 36.03114367
end of yr.16   4039.491551 + 0.009 = 36.35542396
end of yr.17   4075.846975 + 0.009 = 36.68262278
end of yr.18   4112.529598 + 0.009 = 37.01276638
end of yr.19   4149.542365 + 0.009 = 37.34588128
end of yr.20   4186.888246 + 0.009 = 37.68199421
end of yr.21   4224.57024   + 0.009 = 38.02113216
end of yr.22   4262.591372 + 0.009 = 38.36332235
end of yr.23   4300.954695 + 0.009 = 38.70859225
end of yr.24   4339.663287 + 0.009 = 39.05696958
end of yr.25   4378.720256 + 0.009 = 39.40848231
end of yr.26   4418.128739 + 0.009 = 39.76315865
end of yr.27   4457.891897 + 0.009 = 40.12102708
end of yr.28   4498.012924 + 0.009 = 40.48211632
end of yr.29   4538.495041 + 0.009 = 40.84645537
end of yr.30   4579.341496 + 0.009 = 41.21407346
end of yr.31   4620.55557   + 0.009 = 41.58500013
end of yr.32   4662.14057   + 0.009 = 41.95926513
end of yr.33   4704.099835 + 0.009 = 42.33689851
end of yr.34   4746.436733 + 0.009 = 42.7179306
end of yr.35   4789.154664 + 0.009 = 43.10239198
end of yr.36   4832.257056 + 0.009 = 43.4903135