Question

2. Sally Medavoy will invest $8,000 a year for 3 years in a fund that will earn 10% annual interest. If the first payment into the fund occurs today, what amount will be in the fund in 3 years

Answer 1

Answer: $10,746

Explanation:

Using Compound interest formula

A= p(1+r/n) *nt

A= final amount =?

P= initial principal =$8, 000

r = interest rate = 0.1

n= nob of times interest applied(3)

t=nob of times period elapsed (3)

A = 8,000 (1+0.1/3) *9

A = 8000 (3+0.1/3) *9

A= 8000 (3.1/3) *9

A = 8000 (1.0333) *9

A = 8000 × 1.34327

A= $10,746