Question

Suppose an individual's retirement account with a balance of $165,000 is transferred to a new investment plan that pays 8% interest compounded annually. How much will the account be worth after 3 years? (Remember, the formula is A = P(1 + r)t.)

Answer 1

`A=\$207,852.48`

Explanation:

we know that

The compound interest formula is equal to

`A=P(1+(r)/(n))^(nt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`t=3\ years\\ P=\$165,000\\ r=0.08\\n=1`

substitute in the formula above

`A=\$165,000(1+(0.08)/(1))^(1*3)=\$207,852.48`