Question

You are scheduled to receive $13,000 in two years. When you receive it, you will invest it for six more years, at 7.5% per year. How much will you have in eight years?

Answer 1

To find out how much you will have in eight years, we can use the formula for compound interest. After investing $13,000 for six years at an annual interest rate of 7.5%, you will have approximately $17,939.69.

Step-by-step explanation:

To find out how much you will have in eight years, we can use the formula for compound interest. Compound interest is calculated using the formula A = P(1+r/n)^(nt), where A is the final amount, P is the principal amount, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years. In this case, the principal amount (P) is $13,000, the annual interest rate (r) is 7.5%, the number of times interest is compounded per year (n) is 1, and the number of years (t) is 6. Plugging these values into the formula, we get A = 13000(1+0.075/1)^(1*6) = $17,939.69. Therefore, you will have approximately $17,939.69 after investing $13,000 for six years at an annual interest rate of 7.5%.