Justin Beiber wants to save enough money to make a down payment on a new home. He decided to put $10,000 into a savings account at the end of each of the next ten years. If he earns 4% compound interest, how much money will he have at the end of the ten years

Question

Ryan

Business

27 February, 13:10

Justin Beiber wants to save enough money to make a down payment on a new home. He decided to put $10,000 into a savings account at the end of each of the next ten years. If he earns 4% compound interest, how much money will he have at the end of the ten years

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Answers (1)

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Alice Moses · Answer 1

Justin Beiber would have in the savings account $14,802.44 at the end of the ten years

Explanation:

The amount that Justin Beiber would have at end of ten years with interest rate of 4% can be determined using the future value provided below:

FV=PV * (1+r) ^n

PV is the amount deposited into the savings account today i. e $10,000

r is the rate on the deposit at 4%

n is the number of years the savings would last which is 10 years

FV=$10,000 * (1+4%) ^10

FV=$10,000 * (1+0.04) ^10

FV=$10,000 * (1.04) ^10

FV=$10,000*1.480244285

FV=$14,802.44

The dollar interest = $14,802.44-$10,000.00=$4,802.44