Question

Assume you've just received a bonus at work of $4,323. You deposit that money in the bank today, where it will earn interest at a rate of 9% per year. How much money will you have in the account after 9 years?

Answer 1

To have $10,000 in ten years with a 10% annual interest rate compounded annually, you need to deposit around $3,855.88.

Step-by-step explanation:

To calculate the amount of money you need to deposit to have $10,000 in ten years with a 10% annual interest rate compounded annually, you can use the formula for compound interest:

A = P(1 + r/n)^(n*t)

Where:

• A is the future value ($10,000 in this case)
• P is the principal amount (the amount you need to deposit)
• r is the annual interest rate (10% in this case, which needs to be converted to decimal form as 0.10)
• n is the number of times interest is compounded per year (1 for annually compounded interest)
• t is the number of years

So, using the formula: 10,000 = P(1 + 0.10/1)^(1*10)

Rearranging the equation, we get:

P = 10,000 / (1 + 0.1)^10

Calculating the value of P comes out to be approximately $3,855.88.