Question

if you make a one-time investment of $500 at 8% interest compounded annually, how much money will you have in 20 years? 50 years?

Answer 1

The formula for annually compounded interest is as follows:

`A = P(1 + r)^t`

P is the initial amount you invest, r is the interest rate as a decimal, and t is the number of years the money will have been invested.

Convert the 8% interest rate into a decimal by dividing by 100:

`8 / 100 = 0.08`

We now have all of our values. Plug the known values into the equation:

`P = 500, r = 0.08`

`t = 20`

`500(1+0.08)^(20) = 500(1.08)^(20) = \boxed{2330.48}`

`t = 50`

`500(1+0.08)^(50) = 500(1.08)^(50) = \boxed{23450.81}`