How much is $20,000 compounded annually at 6% for 35 years? Thank you.
Please show solution
what is 20000(1.06)^35 ?
To calculate the future value of an investment compounded annually, you can use the formula:
Future Value = Principal Amount × (1 + Interest Rate)^Time
Given:
Principal Amount (P) = $20,000
Interest Rate (r) = 6% (or 0.06)
Time (t) = 35 years
Plugging in these values into the formula, we have:
Future Value = $20,000 × (1 + 0.06)^35
Now, let's calculate the future value step by step:
1. Calculate the interest rate plus 1: 1 + 0.06 = 1.06.
2. Raise this value to the power of the time, which is 35: 1.06^35 = 12.618.
3. Multiply the principal amount by this value to get the future value: $20,000 × 12.618 = $252,360.
So, $20,000 compounded annually at 6% for 35 years will grow to approximately $252,360.