You want to go to europe 5 years from now, and you can save $3,100 per year, beginning one year from today. you plan to deposit
the funds in a mutual fund that you think will return 8.5% per year. under these conditions, how much would you have just after you make the 5th deposit, 5 years from now?
This is the concept of application of compound interest, to calculate the amount I will have after the 5th deposit we proceed as follows; A=p(1+r/100)^n where; A=future amount p=principle r=rate n=number of years thus substituting the values in our formula we get: A=3,100(1+8.5/100)^5 A=3,100(1+0.085)^5 A=3100(1.085)^5 A=4,666.34 The amount of money after 5 years will be $4,666.24
