Question

4. Using a 10% rate, I calculated that our company is worth $ M USD in year 6. Carl the Intern was put in charge of the company's' retirement accounts. Also, over the last 7 years have you actually been watching Carl? He lost your coffee money, $1000 per year over the last years (1-3), gambling in an Irish pub and then tried to make your money back and lost $500 a year for years 4-5. At 10% per year compounded monthly. I'm not sure how much that is but I think it's worth firing him

hiw much money did carl lose?

Answer 1

for monthly compounding with annual return rate of r% and n no of years

compounding formula = P(1+(r/12))^(12*n)

Total money lost by Carl = 1000(1+0.1/12)^(12*6) + 1000(1+0.1/12)^(12*5) + 1000(1+0.1/12)^(12*4) + 500(1+0.1/12)^(12*3) +500(1+0.1/12)^(12*2) = $6236.54