Question

Using the formula A=P(1+r)^t calculate the value of an initial investment of $4,500 after 10 years at 4% interest.

Answer 1

The solution is $\ 6661$

Explanation:

The initial investment is $4500

The time taken is 10 years.

The rate of interest is 4%

We shall determine the value of A using the formula $A=P(1+r)^t$

where P is the initial investment,

r is the rate of interest and

t is time

Let us substitute the values $P=4500$ , $t=10$ and $r=4 \%$ in the formula $A=P(1+r)^t$

Thus, we have,

$A=4500(1+0.04)^{10}$

Adding the values within the bracket, we have,

$A=4500(1.04)^{10}$

Simplifying, we get,

$A=4500(1.4802)$

Multiplying, we have,

$A=6661$

Thus, the value is $6661