Question

If the present value of my investment is $8,000 and the rate of interest is 12% compounded annually, what will the value be after 7 years?​

Answer 1

Answer:

$17,685.45

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

The first step is to change 12% into a decimal:

12% -> $\frac{12}{100}$ -> 0.12

Next, lets plug in the values:

$A=8,000(1+\frac{0.12}{1})^{1(7)}$

$A=17,685.45$

After 7 years, you will have $17,685.45