Question

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A principal of $2700 is invested at 5.25% interest, compounded annually. How much will the investment be worth after 11 years?
Use the calculator provided and round your answer to the nearest dollar.

Answer 1

Future value, A = $4740.39

Explanation:

Given the following data;

Principal = $2700

Interest rate = 5.25% = 5.25/100 = 0.0525

Time = 11 years

Number of times, n = 1

To find the future value, we would use the compound interest formula;

`A = P(1 + (r)/(n))^(nt)`

Where;

A is the future value.

P is the principal or starting amount.

r is annual interest rate.

n is the number of times the interest is compounded in a year.

t is the number of years for the compound interest.

Substituting into the equation, we have;

`A = 2700(1 + (0.0525)/(1))^(1*11)`

`A = 2700(1 + 0.0525)^(11)`

`A = 2700(1.0525)^(11)`

`A = 2700(1.7557)`

Future value, A = $4740.39