Question

Design a spreadsheet to compute the dollar amount in each of the next 10 years of an initial investment returning a constant annual interest rate. Interest is reinvested each year so that the amount returning interest grows. What is the dollar amount 6 years from now of $400 invested at 8% annual interest

Answer 1

Answer:

The dollar amount 6 years from now of $400 invested at 8% annual interest is $634.75.

Explanation:

Note: See the attached excel file for the designed spreadsheet showing the computation of the ending balance or the dollar amount in each of the next 10 years.

In the attached excel file, we have:

Amount invested = Beginning balance in Year 1 = $400

Interest amount in each Year = Beginning balance in each Year * Constant annual interest rate of 8%

Beginning balance in each Year = Last Year's ending balance

Ending balance in each Year = Beginning balance in each Year + Interest amount in each Year

From the attached excel, the Ending balance in Year 6 of $634.75 (in bold red color) is the the dollar amount 6 years from now of $400 invested at 8% annual interest.

Therefore, the dollar amount 6 years from now of $400 invested at 8% annual interest is $634.75.

Download xlsx