Question

If the present value of my investment is $8,000 and the rate of interest is 12% compounded annually, what will the value be after 7 years?​

Answer 1

$17,685.45

Explanation:

We will use the compound interest formula to solve this:

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

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

The first step is to change 12% into a decimal:

12% ->
`(12)/(100)` -> 0.12

Next, lets plug in the values:

`A=8,000(1+(0.12)/(1))^(1(7))`

`A=17,685.45`

After 7 years, you will have $17,685.45