Question

You are looking to save money to start a business. You currently have $500 saved up. We JustWantUrMoney Bank offers a savings account with 12%

interest, compounded annually. How much money would you have after 10 years? Round to the nearest cent, if necessary.

Answer 1

You would have $1552.9 after 10 years.

Explanation:

Compound interest:

The compound interest formula is given by:

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

Where A(t) is the amount of money after t years, P is the principal(the initial sum of money), r is the interest rate(as a decimal value), n is the number of times that interest is compounded per year and t is the time in years for which the money is invested or borrowed.

You currently have $500 saved up.

This means that
`P = 500`

12% interest, compounded annually.

This means that
`r = 0.12, n = 1`.

How much money would you have after 10 years?

This is A(10). So

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

`A(10) = 500(1 + (0.12)/(1))^(10)`

`A(10) = 1552.9`

You would have $1552.9 after 10 years.