Question

Robert plans to invest $650 in a savings account at the beginning of each of the next seven years. If his opportunity cost rate is 5 percent compounded annually, how much will his investment be worth at the end of seven years?

Answer 1

Amount after 7 years will be equal to $914.615

Step-by-step explanation:

We have given initial investment P = $650

It is given it is compounded annually with rate 5%

So rate of interest r = 5%

Time period is given n = 7 years

We have to find the amount after 7 years

Future value is given by
`A=P(1+(r)/(100))^n`, here A is future value P is initial investment r is rate of interest and n is time period

So
`A=650(1+(5)/(100))^7`

`A=650* 1.05^7`

`A=650* 1.4071`

`A=914.615`

So the amount after 7 years will be $914.615