Mr Sooto makes an initial investment of 10000 for a period of 5years. Find the value of the investment after the 5 years, if the investment earns the return of 6% compounded annually
The formula for compound interest is:
A = P(1 + r/n)^nt
Where:
A = the total amount or value of the investment after the specified time
P = the principal amount or initial investment
r = the annual interest rate (as a decimal)
n = the number of times the interest is compounded per year
t = the time period (in years)
Here, P = 10000, r = 6% = 0.06, n = 1 (compounded annually), and t = 5.
Plugging in these values, we get:
A = 10000(1 + 0.06/1)^(1*5)
A = 10000(1.06)^5
A = 10000(1.338225)
A = 13382.25
Therefore, the value of the investment after 5 years is $13,382.25.
To calculate the value of the investment after 5 years with a return of 6% compounded annually, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = final amount after the investment period
P = initial investment amount
r = annual interest rate (in decimal form)
n = number of times interest is compounded per year
t = number of years of the investment
In this case, the initial investment amount (P) is $10,000, the annual interest rate (r) is 6% (or 0.06 in decimal form), the number of times interest is compounded per year (n) is 1 (since it is compounded annually), and the investment period (t) is 5 years.
Plugging these values into the formula, we get:
A = 10000(1 + 0.06/1)^(1*5)
A = 10000(1 + 0.06)^(5)
A = 10000(1.06)^(5)
A ≈ $13382.94
Therefore, the value of the investment after 5 years would be approximately $13,382.94.
To find the value of the investment after 5 years with a 6% annual compounded return, we can use the formula for compound interest:
A = P(1 + r/n)^(n*t)
Where:
A = the future value of the investment
P = the principal amount (initial investment)
r = annual interest rate (as a decimal)
n = number of times the interest is compounded per year
t = number of years
In this case, the principal amount (P) is $10,000, the annual interest rate (r) is 6% or 0.06, the number of times compounded per year (n) is 1 (annually), and the number of years (t) is 5.
Plugging in these values into the formula, we have:
A = 10000(1 + 0.06/1)^(1*5)
A = 10000(1 + 0.06)^5
A = 10000(1.06)^5
Using a calculator or doing the calculations manually, we have:
A ≈ 10000(1.3382255776)
A ≈ 13382.26
Therefore, the value of the investment after 5 years with a 6% annual compounded return would be approximately $13,382.26.