FV

[Vv20]

Hello
Learning FV, PV, compound
Ive done this sum

$1000 Principal, 3% interest rate, compounded monthly, 5 years. (Interest 0.03/12= 0.0025)
FV = PV(1+i)^n
1,000(1+0.0025)^60
1,000(1.161616)
FV = $1,161.62

This is from an online tutorial
FV = PV(1+i)^n
1,000(1+0.025)^60
1,000(4.3997897)
FV = $4,399.79

Which is correct?
When a rate is divided (by number of compounding periods per year) and has two zero's after the decimal place, am i meant to take a zero out?

Thanks for your help

 

[Deleted member 4993]

Hello
Learning FV, PV, compound
Ive done this sum

$1000 Principal, 3% interest rate, compounded monthly, 5 years. (Interest 0.03/12= 0.0025)
FV = PV(1+i)^n
1,000(1+0.0025)^60
1,000(1.161616)
FV = $1,161.62

This is from an online tutorial
FV = PV(1+i)^n
1,000(1+0.025)^60
1,000(4.3997897)
FV = $4,399.79

Which is correct?
When a rate is divided (by number of compounding periods per year) and has two zero's after the decimal place, am i meant to take a zero out?

Thanks for your help

You are correct.

For a quick check - the principal amount will "double" approximately in 24 years at that interest rate. So to quadruple the money in five years, the interest rate has to be about ~30% (as you had suspected).

Good work.....

 

[Vv20]

Thank you Subhotosh Khan for your reply.
Its hard for me to know for sure, as i am always getting something wrong.