What is the maturity value of $4500 that was placed into a savings account for 28 years if the account gave 1.3% APR and was compounded monthly?
We can use the formula for compound interest:
A = P(1 + r/n)^(nt)
where:
A = the maturity value
P = the principal (initial amount)
r = the annual interest rate as a decimal
n = the number of times the interest is compounded per year
t = the time in years
Plugging in the given values:
P = $4500
r = 0.013 (1.3% expressed as a decimal)
n = 12 (compounded monthly)
t = 28
A = 4500(1 + 0.013/12)^(12*28)
A = $6825.81
Therefore, the maturity value of the savings account after 28 years is $6,825.81.