Question

Justin Beiber wants to save enough money to make a down payment on a new home. He decided to put $10,000 into a savings account at the end of each of the next ten years. If he earns 4% compound interest, how much money will he have at the end of the ten years

Answer 1

Justin Beiber would have in the savings account $14,802.44 at the end of the ten years

Step-by-step explanation:

The amount that Justin Beiber would have at end of ten years with interest rate of 4% can be determined using the future value provided below:

FV=PV*(1+r)^n

PV is the amount deposited into the savings account today i.e $10,000

r is the rate on the deposit at 4%

n is the number of years the savings would last which is 10 years

FV=$10,000*(1+4%)^10

FV=$10,000*(1+0.04)^10

FV=$10,000*(1.04)^10

FV=$10,000*1.480244285

FV=$14,802.44

The dollar interest =$14,802.44-$10,000.00=$4,802.44

Answer 2

$14,802.44

Step-by-step explanation:

Compound interest is the accumulated interest calculated on initial right from deposit till withdrawal. It always span over a long period of time and makes deposit grow faster.

Workings

Principal - $10,000

Rate - 4%

Period = 10 years

Formula = A = [P(1+i)^n]-p

= [10000(1+0.04)^10]-10000

$14,802.44