Now, assume that Addison's savings institution modifies the terms of her account and agrees to pay 5.8% in compound interest on her $1,000 balance. All other things being equal, how much money will Addison have in her account in nine years?

Question

Harley Ortiz

Business

11 March, 16:48

Now, assume that Addison's savings institution modifies the terms of her account and agrees to pay 5.8% in compound interest on her $1,000 balance. All other things being equal, how much money will Addison have in her account in nine years?

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Answers (1)

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Bumpkin · Answer 1

Addison will have $ 1,661 in her account in nine years.

Explanation:

This problem requires us to calculate value of our investment of $ 1000 dollars after nine years. The interest on the investment is 5.8% compounded annually.

This problem can be solved by using simple compounding formula given below.

Future Value = Present Value (1+interest rate%) ^-period

Future Value = 1,000 (1+5.8) ^9

Future = $ 1,661