Suppose your friends parents invest $25,000 in an account paying 6% compound annually what will be the balance after nine years
To calculate the balance after nine years, we can use the formula for compound interest:
A = P*(1 + r/n)^(n*t)
Where:
A is the final balance
P is the principal amount (initial investment)
r is the annual interest rate (expressed as a decimal)
n is the number of times interest is compounded per year
t is the number of years
In this case:
P = $25,000
r = 6% = 0.06 (convert percent to decimal)
n = 1 (compounded annually)
t = 9 years
Plugging in the values into the formula:
A = 25000*(1 + 0.06/1)^(1*9)
A = 25000*(1 + 0.06)^9
A = 25000*(1.06)^9
A ≈ $40,079.50
Therefore, the balance after nine years will be approximately $40,079.50.
To calculate the balance after nine years with compound interest, we can use the formula for compound interest: B = P(1 + r/n)^(nt), where:
B = the final balance
P = principal amount (initial investment)
r = annual interest rate (as a decimal)
n = number of times interest is compounded per year
t = number of years
In this case:
P = $25,000
r = 6% = 0.06 (converted to decimal)
n = 1 (since it is compounded annually)
t = 9 years
Plugging in these values into the formula, we get:
B = 25000(1 + 0.06/1)^(1*9)
B = 25000(1 + 0.06)^9
B ≈ 25000(1.06)^9
B ≈ 25000(1.645892)
B ≈ $41,147.30
Therefore, the balance after nine years would be approximately $41,147.30.
To find the balance after nine years, we can use the compound interest formula:
A = P(1 + r/n)^(nt)
Where:
A = the final amount
P = the principal amount (initial investment)
r = the annual interest rate (expressed as a decimal)
n = the number of times that interest is compounded per year
t = the number of years
In this case, the principal amount is $25,000, the annual interest rate is 6% (or 0.06 as a decimal), and the interest is compounded annually (n=1). We want to calculate the balance after nine years (t=9).
Plugging in the values into the formula, we have:
A = 25,000(1 + 0.06/1)^(1*9)
A = 25,000(1.06)^9
Now, let's evaluate this expression using a calculator:
A ≈ 25,000(1.06)^9
A ≈ 25,000 * 1.79084782
Calculating the result:
A ≈ 44,771.20
So, the balance after nine years will be approximately $44,771.20.