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You choose to invest your $3,610 income tax refund check (rather than spend it!) in an account earning 4% compounded annually. How much will the account be worth in 30 years?

worth = ?

User Sompylasar
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1 Answer

7 votes

Answer:

we find that the account will be worth approximately $10,305.66 in 30 years.

Explanation:

To calculate the future value of an investment, we can use the compound interest formula:

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

Where:

A = the future value of the investment

P = the principal amount (initial investment)

r = the annual interest rate (expressed as a decimal)

n = the number of times interest is compounded per year

t = the number of years

In this case, you have an initial investment of $3,610, an annual interest rate of 4% (0.04 as a decimal), and the interest is compounded annually (n = 1). The investment period is 30 years (t = 30).

Using the formula:

A = 3610(1 + 0.04/1)^(1*30)

A = 3610(1 + 0.04)^30

A = 3610(1.04)^30

Calculating this expression, we find that the account will be worth approximately $10,305.66 in 30 years.

User Renatojf
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