Question

Using the formula A=P(1+r)^t calculate the value of an initial investment of $4,500 after 10 years at 4% interest.

Answer 1

The solution is
`\$ 6661`

Step-by-step explanation:

The initial investment is $4500

The time taken is 10 years.

The rate of interest is 4%

We shall determine the value of A using the formula
`A=P(1+r)^t`

where P is the initial investment,

r is the rate of interest and

t is time

Let us substitute the values
`P=4500` ,
`t=10` and
`r=4 \%` in the formula
`A=P(1+r)^t`

Thus, we have,

`A=4500(1+0.04)^(10)`

Adding the values within the bracket, we have,

`A=4500(1.04)^(10)`

Simplifying, we get,

`A=4500(1.4802)`

Multiplying, we have,

`A=6661`

Thus, the value is $6661