Question

. You invest £4000 in a fund which earns 11% compound return per year. How much would the fund be worth after 10 years, given that you removed half of the balance after 5 years?

Answer 1

Answer: $5,678.85

Explanation:

First find out how much the fund was worth after 5 years.

Compound interest formula:

= Investment * (1 + rate) ^ years

= 4,000 * ( 1 + 11%)⁵

= £6,740.23

Half was removed:

= 6,740.23/2

= £3,370.12

Then compound this for the remaining 5 years:

= 3,370.12 * (1 + 11%)⁵

= $5,678.85