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12 June, 11:17

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

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  1. 12 June, 11:28
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    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
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