If May invests $5,000 compounded annually at 8%, how much money will she have at the end of 8 years?
5000(1+.08)^8
43200
To calculate the amount of money May will have at the end of 8 years with an annual compounding interest rate of 8%, you can use the formula for compound interest:
A = P(1 + r/n)^(nt)
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, May invests $5,000, the interest is compounded annually (n = 1), the interest rate is 8% (r = 0.08), and the investment period is 8 years (t = 8). Plugging these values into the formula, we get:
A = $5,000(1 + 0.08/1)^(1*8)
Calculating the exponent:
A = $5,000(1 + 0.08)^8
You can simplify the expression inside the parentheses:
A = $5,000(1.08)^8
Using a calculator, raise 1.08 to the power of 8 and multiply it by $5,000:
A ≈ $5,000(1.717468)
A ≈ $8,587.34
Therefore, May will have approximately $8,587.34 at the end of 8 years.