Question

Karolyn puts 4,500 into a life insurance policy that pays 7.5% annual interest. If no additional investment is made into the policy how much accumulated interest should Karolyn expect at the end of 10 years?

Answer 1

Answer: $‭4,774.64‬

Explanation:

The amount after 10 years assuming 7.5% compound interest is:

= Amount * ( 1 + rate) ^ no. of years

= 4,500 * ( 1 + 7.5%)¹⁰

= $9,274.64

The accumulated interest is:

= Amount after 10 years - Present amount

= 9,274.64 - 4,500

= $‭4,774.64‬