Question

John Paul will receive a gift of $9,000 when he gets his promotion, which he expects to be in 6 years. If he can save his money at an interest rate of 3.5%, then how much will he have in 16 years?

Answer 1

Answer:

If John Paul invests $9000 in six years' time at an interest of 3.5% per year, he would have $12695.39 in sixteen years' time

Explanation:

John Paul would receive the gift for his promotion in six years' time and would only be able to invest the amount for ten years(16 years less 6 years).

In knowing the amount he would have if invests the $9000 for 10 years at an interest rate of 3.5%, we need to use future value formula,which is given as :

Future value=PV*(1+i)^n

PV present value is the amount to be invested =$9000

i is the rate of return of 3.5%

n is the period of investmet i.e. 10 years

FV=9000*(1+0.035)^10

FV=$12695.39