grandma ploan to finance her grandchilds college education she has 50,000 to invest use a long range investment pln ,cd,saving bond etc. the plan is to earn compound interest.the principal is(p)50,000 interest rate is (r)3.60years for investment is(6)this is time state number compounding periods per year this is (N)futre valueas an exponenial function with time as the independent varible: f(t)=P(1+r/n)nt
To calculate the future value (FV) of an investment using compound interest, you can use the formula:
FV = P(1 + r/n)^(nt)
Where:
FV = Future Value
P = Principal (initial investment)
r = Interest rate (in decimal form)
n = Number of compounding periods per year
t = Time (in years)
In this case, Grandma wants to invest $50,000 with a 3.6% interest rate for 6 years, assuming compound interest. Let's plug in the values into the formula:
FV = 50000(1 + 0.036/1)^(1*6)
First, let's simplify the interest rate: 0.036/1 = 0.036
FV = 50000(1 + 0.036)^(6)
Now calculate the exponent: (1 + 0.036)^(6) = 1.036^6 ≈ 1.224081949
FV = 50000 * 1.224081949
FV ≈ $61,204.10
Therefore, using a long-range investment plan with a 3.6% interest rate, Grandma's $50,000 investment is expected to grow to approximately $61,204.10 in 6 years.