Question

A principal of $3600 is invested at 7.5% interest, compounded annually. How much will the investment be worth after 6 years?

Answer 1

After 6 years the investment is $5555.88

Step-by-step explanation:

A principal of $3600 is invested at 7.5% interest, compounded annually. How much will the investment be worth after 6 years?

The formula used to find future value is:

$A(t)=P(1+\frac{r}{n})^{nt}$

where A(t) = Accumulated amount

P = Principal Amount

r = annual rate

t= time

n=  compounding periods per year

We are given:

P = $3600

r = 7.5 %

t = 6

n = 1

Putting values in formula:

$A(t)=P(1+\frac{r}{n})^{nt}\\A(t)=3600(1+\frac{0.075}{1})^{6*1}\\A(t)=3600(\frac{1.075}{1})^6\\A(t)=3600(1.075)^6\\A(t)=3600(1.543)\\A(t)=5555.88$

So, After 6 years the investment is $5555.88

Keywords: Compound Interest formula

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