Question

If $64,000 is invested in an IRA account with an annual interest rate of 8% compounded once a year, what is the value of the account after 6 years? Round your answer to two decimal places.

Answer 1

Answer: the value of the account after 6 years is $101559.96

Step-by-step explanation:

If $64,000 is invested in an IRA account, then

Principal = $64,000

So P = 64,000

The rate at which $64000 was compounded is 8%

So r = 8/100 = 0.08

If it is compounded once in a year, this means that it is compounded annually (and not semi annually, quarterly or others). So

n = 1

We want to determine the value of the account after 6 years, this means

time, t = 6

Applying the compound interest formula,

A = P(1 + r/n)^nt

A = amount after n number of years

A = 64000( 1 + 0.08/1)^1×6

A = 64000(1.08)^6

A= 64000×1.58687432294

A= 101559.956668416

Approximately $101559.96 to 2 decimal places