Question

An engineer deposits $10,000 into an account when the market interest rate is 10% per year and the inflation rate is 5% per year. If the account is left undisturbed for 5 years. How much money will be in the account?

Answer 1

After 5 years, an account with an initial deposit of $10,000 at a 10% compounded annual interest rate will grow to $16,105.10.

Step-by-step explanation:

The student is asking how much money will be in an account after 5 years if $10,000 is deposited with an interest rate of 10% per year. To answer this, we will use the formula for compound interest, which is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount (the initial sum of money), r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years.

For this particular problem, the principal amount P is $10,000, the annual interest rate r is 10% or 0.10, interest is compounded annually so n is 1, and the time invested t is 5 years. Plugging these values into the formula gives us A = $10,000(1 + 0.10/1)^(1*5) = $10,000(1.10)^5 = $10,000(1.61051) = $16,105.10.

Therefore, after 5 years, the account will have $16,105.10.