Question

Luis decides to invest $120,000 in a mutual fund that offers him 3.1% compound interest annually. This means that each year, the amount of money he has in the fund increases by 3.1% compared to the previous year. How much total money will there be in Luis's investment after 5 years?

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Answer to a math question Luis decides to invest $120,000 in a mutual fund that offers him 3.1% compound interest annually. This means that each year, the amount of money he has in the fund increases by 3.1% compared to the previous year. How much total money will there be in Luis's investment after 5 years?

$Expert avatar$

Timmothy

4.8

99 Answers

1. Use the compound interest formula:

A = P \left(1 + \frac{r}{n}\right)^{nt}

.

2. Substitute the given values:

P = 120,000

r = 0.031

n = 1

, and

t = 5

.

3. Simplify the expression:

A = 120,000 \left(1 + \frac{0.031}{1}\right)^5

.

4. Further simplify inside the parentheses:

A = 120,000 \left(1 + 0.031\right)^5

.

5. Which simplifies to:

A = 120,000 \left(1.031\right)^5

.

6. Calculate the exponent:

A=120,000\left(1.1649\right)

.

7. Multiply to find:

A\approx139789.51

.

Thus, the total money in Luis's investment after 5 years will be approximately

139789.51

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Luis decides to invest $120,000 in a mutual fund that offers him 3.1% compound interest annually. This means that each year, the amount of money he has in the fund increases by 3.1% compared to the previous year. How much total money will there be in Luis's investment after 5 years?

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