You placed 6250 in a savings account today that earns an ann

You placed $6,250 in a savings account today that earns an annual interest rate of 7 percent compounded annually. How much you will have in this account at the end of 32 years? Assume that all interest received at the end of the year is reinvested the next year.

Solution

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

Hence

A=6250(1.07)^32

=$6250*8.715270798

which is equal to

=$54470.44(Approx)(Please note that intermediate calculations have not been rounded off].