Question

Suppose your friends parents invest $25000 in an account paying 6% compounded annually. What will the balance be in 10 years

Answer 1

Answer:

$44,771.19

Step-by-step explanation:

We will use the compound interest formula to solve this:

$A=P(1+\frac{r}{n} )^{nt}$

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First, lets change 6% into a decimal:

6% -> $\frac{6}{100}$ -> 0.06

Now, plug the values into the equation:

$A=25,000(1+\frac{0.06}{1})^{1(10)}$

$A=44,771.19$

The balance after 10 years will be $44,771.19