Suppose your friends parents invest $25,000 in an account paying 7% compounded annually, what will be the balance after 6 years? HELP FAST
Just use your formula.
A = 25000(1 + 0.07)^6
To calculate the balance after 6 years, we 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 = the annual interest rate (in decimal form)
n = the number of times that interest is compounded per year
t = the number of years
In this case, the principal amount (P) is $25,000, the interest rate (r) is 7% expressed as a decimal (0.07), the number of times compounded per year (n) is 1 (compounded annually), and the number of years (t) is 6.
Let's plug these values into the formula and calculate the balance:
A = 25000 * (1 + 0.07/1)^(1*6)
A = 25000 * (1 + 0.07)^6
A = 25000 * (1.07)^6
A ≈ 25000 * 1.489731
A ≈ $37,243.28 (rounded to the nearest cent)
Therefore, the balance after 6 years would be approximately $37,243.28.
To find the balance after 6 years, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value (balance) of the investment
P = the principal amount (initial investment)
r = the annual interest rate (as a decimal)
n = the number of times interest is compounded per year
t = the number of years
In this case, let's break down the information given in the question:
Principal amount (P) = $25,000
Annual interest rate (r) = 7% (as a decimal, so r = 0.07)
Compounding period (n) = 1 (since it's compounded annually)
Number of years (t) = 6
Now, we can plug in these values into the formula and calculate the balance.
A = 25000(1 + 0.07/1)^(1*6)
A = 25000(1 + 0.07)^6
A = 25000(1.07)^6
A ≈ 25,000 * 1.503
A ≈ $37,575
Therefore, the balance after 6 years would be approximately $37,575.