Question

An investment of $25,000 pays 7% (simple) annual interest. What will be the total value of the investment in 10 years? Give your answer in dollars to the nearest dollar. Do not include the dollar symbol or commas in your answer.

Answer 1

42,500.

Step-by-step explanation:

To calculate this, we use the formula A=P(1+rt). The total value of the investment after 10 years is given by

A=25,000(1+(0.07)(10))=$42,500

or (25,000)(.07)(10)=17500

25000+17500=42500

Answer 2

Answer: Simple Interest earned during 10 years = 25000 * 7% * 10

=(250*7*10)

= 17500

Total Value of investment = 17500 + 25000 = 42500

Step-by-step explanation:

(1) For finding the total value of the investment in 10 years, we have to first compute the simple interest earned for 10 years i.e. the investment time period.The formula of calculating Simple Interest is as follows-

Value Invested * Interest Rate * Time period of investment

Applying the simple interest formula we will get the value of simple interest as shown in the answer above.

(2) Lastly, we have to add Value invested in the beginning and the Simple Interest earned during the 10 years for finding the total value of the investment in 10 years i.e.

Total Value of investment = Value invested in the beginning + Simple Interest Earned during the investment period (10 years in this case)