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1 year ago

Damian invests $5,000 today in an account earning 6% per year. How much is the investment worth in 4 years?

1 answer:

7 0

Based on the fact that Damien invested $5,000 and left it in an account that earns 6% for 4 years, the investment worth would be b. $6,312.38.

<h3>What would be the value of the investment?</h3>

The value of the investment in 4 years is considered to be its future value when looking at it from the present.

Using the rate being earned, the investment amount, and the number of years the investment will be invested, the future value formula is:

Future value = Investment x ( 1 + rate)^ number of years

Solving gives:

= 5,000 x ( 1 + 0.06) ⁴

= 5,000 x 1.06⁴

= 5,000 x 1.26247696

= $6,312.3848

= $6,312.38

In conclusion, the value of Damien's investment after a period of four years at 6% per year comes to $6,312.38.

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a. Computation of Effective Interest Rate

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3 years ago

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