Find the future value of $10,000 invested now after five years if the annual interest rate is 8 percent.
a. What would be the future value if the interest rate is a simple interest rate?
b. What would be the future value if the interest rate is a compound interest rate?

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  1. a. P = Po + Po*r*t.
    P = 10000 + 10000*0.08*5 = $14,000.

    b. Compounded annually?
    P = Po(1+r)^n.
    P = 10,000(1.08)^5 = $14,693.28.

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