motorcycle company invested 250,000 at 4.5% compounded monthly to be used for the expansion of their manufacturing facilities how much will available for the project in 3.5 years?
r = .045/12 = .00375
number of periods = 12 *3.5 = 42 months
1.00375^42 = 1.170235983
times 250000 = 292,558
To calculate the amount of money available for the project in 3.5 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the final amount
P = the principal amount (initial investment)
r = annual interest rate (4.5% in decimal form, so 0.045)
n = number of times interest is compounded per year (in this case, monthly, so 12)
t = time in years (3.5 years)
Let's substitute the values into the formula and calculate the amount:
P = $250,000
r = 0.045
n = 12
t = 3.5
A = 250,000(1 + 0.045/12)^(12*3.5)
To simplify the calculation, we can evaluate the exponent first:
A = 250,000(1 + 0.00375)^(42)
A = 250,000(1.00375)^(42)
Using a calculator or a spreadsheet, we can find the value of (1.00375)^(42). It equals approximately 1.1665.
A = 250,000 * 1.1665
A ≈ $291,625
Therefore, the amount available for the project in 3.5 years will be approximately $291,625.