Final answer:
The future value of $10,000 invested for two years at 10% interest compounded annually is $12,100, calculated using the compound interest formula FV = P × (1 + r)^n.
Step-by-step explanation:
The future value of an investment is calculated using the compound interest formula:
FV = P × (1 + r)^n
Where FV stands for future value, P is the principal amount ($10,000), r represents the annual interest rate (in decimal form, so 10% becomes 0.10), and n represents the number of periods the money is invested for. In this case, n is 2 years.
Plugging the numbers into the formula, the calculation would be:
FV = $10,000 × (1 + 0.10)^2
FV = $10,000 × (1.10)^2
FV = $10,000 × 1.21
FV = $12,100
The future value of $10,000 invested for two years at 10% interest compounded annually is $12,100.