What amount will be accumulated by each of the following inv

What amount will be accumulated by each of the following investments?

1) $8,000 at 7.2% compounded annually over 10 years

2) $52,500 at 8% compounded annually over 5 years

Solution

A = P (1 + r/n) ^ nt:

Where:

A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or borrowed for

1) $8,000 at 7.2% compounded annually over 10 years

A = 8000(1+.072)¹⁰

A = $16033.85

2) $52,500 at 8% compounded annually over 5 years

A = 52500(1+0.8)⁵

A = $77139.72