Question

Suppose you invested $4,500 and it grew by 4% every year for 30 years. How much would this investment be worth after 30 years?

Answer 1

Answer:

a) 14,595.29

Explanation:

We'll use the below compound interest formula to solve the given problem;

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

where A = future amount

P = initial amount = $4500

r = interest rate in decimal = 4/100 = 0.04

n = number of compounding periods = 1

t = time period = 30 years

Let's go ahead and substitute the above values into our formula and solve for A;

$\begin{gathered} A=4500(1+\frac{0.04}{1})^{1\times30} \\ A=4500(3.24339751003) \\ A=14,595.29 \end{gathered}$

We can see from the above that the investment would be worth $14,595.29 after 30 years.