Angela deposits $2500 into an account with an APR of 3.1% for 7 years. Find the future value of the account if interest is compounded monthly. Round your answer to the nearest hundredth, if necessary.
To find the future value of the account with monthly compounding, we will use the formula:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the account
P = the principal amount (initial deposit) = $2500
r = the annual interest rate = 3.1% or 0.031
n = the number of times the interest is compounded per year = 12 (monthly)
t = the number of years the money is invested for = 7
Plugging in the values:
A = 2500(1 + 0.031/12)^(12*7)
A = 2500(1 + 0.002583333)^84
A = 2500(1.002583333)^84
A = 2500 * 1.255641301
A = $3139.10
Therefore, the future value of the account after 7 years with monthly compounding is $3139.10.