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18 June, 14:48

Your client invested $10,000 in an interest-bearing promissory note earning an 11% annual rate of interest, compounded monthly. How much will the note be worth at the end of 7 years, assuming that all interest is reinvested at the 11% rate

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  1. 18 June, 17:56
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    The correct answer is $21,522.04.

    Explanation:

    According to the scenario, the given data are as follows:

    Present value = $10,000

    Rate of interest = 11%

    Rate of interest (r) (compounded monthly) = 11% : 12 = 0.00916

    time period = 7 years

    Time period (compounded monthly) (t) = 7 * 12 = 84

    So, we can calculate the future value by using following method:

    FV = PV * (1 + r) ^t

    By putting the value, we get,

    FV = $10,000 * (1 + 0.00916) ^84

    FV = $21,522.04
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Home » Business » Your client invested $10,000 in an interest-bearing promissory note earning an 11% annual rate of interest, compounded monthly. How much will the note be worth at the end of 7 years, assuming that all interest is reinvested at the 11% rate
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