Question

​(Compound interest​) To what amount will the following investments​ accumulate?
a. ​$4,900 invested for 10 years at 10 percent compounded annually.
b. ​$8,200 invested for 8 years at 9 percent compounded annually.
c. ​$785 invested for 11 years at 12 percent compounded annually.
d. ​$21,000 invested for 4 years at 6 percent compounded annually.

Answer 1

The formula of Future Amount of Principal compounded annually is:

here A is the future value of principal amount P which is compounded at an interest rate, r for n years.

a. Here, P = $4900, r= 10% and n = 10 years
So, A = 4900(1+0.1)^10
A = 4900(1.1)^10
Using calculator for 1.1^10 we find that,
A= 4900(2.59)
A = $12691
So, the accumulated value is $12691

b. Here, P = $8200, r= 9% and n = 8 years
So, A = 8200(1+0.09)^8
A = 8200(1.09)^8
Using calculator for 1.09^8 we find that,
A= 8200(1.99)
A = $16318
So, the accumulated value is $16318

c. Here, P = $785, r= 12% and n = 11 years
So, A = 785(1+0.12)^11
A = 785(1.12)^11
Using calculator for 1.12^11 we find that,
A= 785(3.48)
A = $2731.8
So, the accumulated value is $2731.8

d.Here, P = $21000, r= 6% and n = 4 years
So, A = 21000(1+0.06)^4
A = 21000(1.06)^4
Using calculator for 1.06^4 we find that,
A= 21000(1.26)
A = $26460
So, the accumulated value is $26460