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Financial contracts involving investments, mortgages, loans, and so on are based on either a fixed or a variable interest rate. Assume that fixed interest rates are used throughout this question. Addison deposited $1,000 in a savings account at her bank. Her account will earn an annual simple interest rate of 5.8%. If she makes no additional deposits or withdrawals, how much money will she have in her account in 9 years?

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Answer:

FV= $1661

Explanation:

Giving the following information we need to calculate the money at the final:

PV= $1000

i=0,058

n=9 years.

We need to use the following formula:

FV= PV*[(1+i)^n]

In this exercise:

FV= 1000*[(1+0,058)^9]

FV= $1661

At the end of year 9, she will have $1661

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