Question

Suppose your​ friend's parents invest $ 10,000 in an account paying 5% compounded annually. What will the balance be after 8 ​years?

Answer 1

A = $14,745.544

Explanation:

The equation for compound interest is

A = P (1+i)t

A = final value

P = amount invested (principal) (10000)

i = interest rate, expressed as a decimal (.05)

t = number of years invested (8)

This formula assumes annual compounding.

Plugging in what we know.

A = 10000(1.05)^8

A = 10000 (1.47745544)

A = $14,745.544