Final answer:
The future value of $125 deposited at a 15% interest for thirty years is calculated using the compound interest formula FV = PV(1 + r)^n, resulting in approximately $8,276.48.
Step-by-step explanation:
The question asks about calculating the future value of $125 invested at a 15 percent interest rate for thirty years. To find the future value, we use the compound interest formula, which is more applicable than simple interest when dealing with long-term investments. The compound interest formula is given by FV = PV(1 + r)n, where FV is the future value, PV is the present value, r is the interest rate per period, and n is the number of periods.
For this example:
Present Value (PV): $125
Interest Rate (r): 15% or 0.15 per year
Number of Years (n): 30 years
Now, plugging the values into the formula we get:
Future Value (FV) = $125 × (1 + 0.15)30
Using a calculator for (1 + 0.15)30 we get approximately 66.2118, so:
Future Value (FV) = $125 × 66.2118 = $8,276.48
Therefore, the future value of $125 received today and deposited at a 15% interest rate for thirty years is approximately $8,276.48.