If you invest $1000 today in a savings account that pays 3% annually what will be the Future Value of this amount in 10 years
I = PRT
I = 1,000 * 0.03 * 10
I = ?
Add the interest to 1,000 to find the future value.
Ms Sue did the question using simple interest.
Since you did not specify which type is used, here is the compound interest result
amount = 1000(1.03)^10 = ...
To calculate the future value of an investment compounded annually, we can use the formula:
Future Value = Present Value * (1 + Interest Rate) ^ Number of Periods
In this case, the present value is $1000, the interest rate is 3% (or 0.03 as a decimal), and the number of periods is 10 years.
Putting these values into the formula, we have:
Future Value = $1000 * (1 + 0.03) ^ 10
Now, let's calculate the future value step by step:
Step 1: Compute the value inside the parentheses
(1 + 0.03) = 1.03
Step 2: Raise the value inside the parentheses to the power of the number of periods
1.03 ^ 10 = 1.343916379
Step 3: Multiply the present value by the result from step 2
$1000 * 1.343916379 = $1343.92
Therefore, the future value of $1000 invested at an interest rate of 3% annually for 10 years will be approximately $1343.92.