balance on an initial investment of $1,500 over 25 years at 5% APR. After 10 years about how much interest has the investment earned
I = PRT
I = 1,500 * 0.05 * 10
I = 750
To calculate the balance on an initial investment of $1,500 over 25 years at 5% Annual Percentage Rate (APR) and determine the interest earned after 10 years, you can use compound interest formula.
The formula to calculate compound interest is:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the principal amount (initial investment)
r = the annual interest rate (expressed as a decimal)
n = the number of times that interest is compounded per year
t = the number of years
Given:
P = $1,500
r = 5% (0.05 as a decimal)
n = 1 (compounded annually)
t = 25 years
To find the future value of the investment after 25 years, substitute these values into the formula:
A = $1,500(1 + 0.05/1)^(1*25)
A = $1,500(1.05)^25
A ≈ $3,852.39
So, after 25 years, the investment will grow to approximately $3,852.39.
To calculate the interest earned after 10 years, you can subtract the initial investment from the final balance:
Interest earned = Future value - Initial investment
Interest earned = $3,852.39 - $1,500
Interest earned ≈ $2,352.39
Therefore, after 10 years, the investment will have earned approximately $2,352.39 in interest.