If you invested $1000.00 for 3 years at rate of 5% compound interest, what would be the value of your investment after the term?
To calculate the value of your investment after 3 years with compound interest, you can use the formula:
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 (as a decimal)
n = the number of times that interest is compounded per year
t = the number of years
In this case,
P = $1000.00
r = 5% = 0.05 (as a decimal)
n = 1 (as it is compounded annually)
t = 3 years
Plug the values into the formula:
A = 1000 (1 + 0.05/1)^(1*3)
A = 1000 (1.05)^3
A = 1000 * 1.157625
A = $1157.63
So, the value of your investment after 3 years at a compound interest rate of 5% would be $1157.63.
To calculate the value of your investment after 3 years with compound interest, you can use the formula:
A = P(1 + r/n)^(nt)
Where:
A = the final amount
P = the principal amount (initial investment)
r = annual interest rate (in decimal form)
n = number of times interest is compounded per year
t = number of years
In this case:
P = $1000.00
r = 5% = 0.05 (in decimal form)
n = 1 (annually compounded)
t = 3 years
Substituting the values into the formula:
A = 1000(1 + 0.05/1)^(1*3)
A = 1000(1 + 0.05)^3
A = 1000(1.05)^3
Now, calculate (1.05)^3:
A = 1000(1.157625)
A = $1157.63
Therefore, the value of your investment after 3 years with a 5% compound interest rate would be $1157.63.