How much should linda set aside to buy equipment that costs 7,100 in one year the current interest rate is 0.6% annually compounded annually
To determine how much Linda should set aside to buy equipment that costs $7,100 in one year, we need to calculate the future value of that amount considering the interest rate.
The formula for calculating the future value of an amount compounded annually can be expressed as:
Future Value = Present Value * (1 + Interest Rate)^Time
Here, the Present Value is $7,100, the Interest Rate is 0.6% (or 0.006 as a decimal), and the Time is 1 year.
Let's calculate the future value:
Future Value = $7,100 * (1 + 0.006)^1
Future Value = $7,100 * (1.006)^1
Future Value = $7,100 * 1.006
Future Value ≈ $7,131.06
Therefore, Linda should set aside approximately $7,131.06 to buy the equipment in one year, considering the current interest rate of 0.6% compounded annually.