Question

Peter and Amy Chambers have saved $10,500. They are accumulating funds for a down payment on a house. If they can invest these funds at 6% annual interest for 5 years, how much money will they have accumulated at the end of this five-year time-frame?

Answer 1

Peter and Amy Chambers will have accumulated approximately $13,993.79 at the end of the five-year time frame.

Step-by-step explanation:

To calculate the amount of money the Chambers will have accumulated at the end of five years, we can use the formula for compound interest:

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

Where:

• A = accumulated amount
• P = principal amount (initial investment)
• r = annual interest rate
• n = number of times interest is compounded per year
• t = number of years

In this case, the principal amount is $10,500, the annual interest rate is 6%, compounded annually, and the number of years is 5. Plugging in these values into the formula:

A = 10,500(1+0.06/1)^(1*5) = $13,993.79

Therefore, at the end of the five-year time frame, Peter and Amy Chambers will have accumulated approximately $13,993.79.