2. Sally Medavoy will invest $8,000 a year for 3 years in a fund that will earn 10% annual interest. If the first payment into the fund occurs today, what amount will be in the fund in 3 years

Answer: $10,746

Explanation:

Using Compound interest formula

A = p (1+r/n) * nt

A = final amount = ?

P = initial principal = $8, 000

r = interest rate = 0.1

n = nob of times interest applied (3)

t=nob of times period elapsed (3)

A = 8,000 (1+0.1/3) * 9

A = 8000 (3+0.1/3) * 9

A = 8000 (3.1/3) * 9

A = 8000 (1.0333) * 9

A = 8000 * 1.34327

A = $10,746