Calculate the final value after 10 years if you invest 5000.0 at 2.5% per annum compunded annually?
To calculate the final value after 10 years of investing $5000 at an interest rate of 2.5% per annum, compounded annually, you can use the formula for calculating compound interest:
Final Value = Principal * (1 + Interest Rate)^Time
Where:
- Principal is the initial amount invested ($5000 in this case)
- Interest Rate is the rate of interest per annum (2.5% or 0.025 as a decimal)
- Time is the number of years (10 in this case)
Now let's calculate the final value:
Final Value = 5000 * (1 + 0.025)^10
First, calculate (1 + 0.025)^10:
(1 + 0.025)^10 = 1.025^10 ≈ 1.2800844
Now, multiply the result by the principal amount:
Final Value = 5000 * 1.2800844
Final Value ≈ $6400.42
Therefore, the final value after 10 years would be approximately $6400.42.