today hope Hicks is investing 18 000 at 6 72 compounded annu

today hope Hicks is investing $18, 000 at 6. 72% compounded annually for 5 years how much additional income could she earn if she had invested this amount at 7. 15% compounded annually

Solution

We know that Future value = Investmet * (1+Interest rate)^years

In first years amount to be received after 5 year would be = 18,000*(1.0672)⁵= $ 24,917.33

In second case =18,000(1.0715)⁵=$25,423.39

So additional income could she earn if she invested at 7.15%= $25423.39-$24917.33= $506.06