Question

Mr. Nailor invests $5000 in a money market account at his local bank. He receives annual interest of 10% for 6 years. How much total return will his investment earn during this time period?

Answer 1

To calculate the total return on Mr. Nailor's investment, multiply the principal amount by (1 + interest rate) raised to the power of the time period, and then subtract the principal amount. The total return on Mr. Nailor's investment during this 6-year period is $8578.

Step-by-step explanation:

To calculate the total return on Mr. Nailor's investment, we can use the formula:

Total Return = Principal Amount * (1 + Interest Rate)Time Period - Principal Amount

Plugging in the values:

Total Return = $5000 * (1 + 0.10)6 - $5000

Total Return = $5000 * 1.77156 - $5000

Total Return = $13578 - $5000

The total return on Mr. Nailor's investment during this 6-year period is $8578.