I f you invest 25000 at 8 interest compounded annually appr

. I f you invest $25,000 at 8% interest compounded annually, approximately how much money will be in the account at the end of 10 years? Draw the cash flow diagram. A) $31,000 B) $46,000 C) $54,000 D) $75,000

Solution

the formula for compound interest calculated annually is

A=P(1+i)^n

where

A= amount after n years

P=initial investment

i= rate of interest

n= number of years

A=25000(1.08)^10

A=54000 (approx)

the correct option is (c)