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31 January, 00:50

you iherited $12,000 from great-uncle michael. If you invest it and average an 8% annual rate of return, compounded anually how much will you have in 20 years

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  1. 31 January, 01:15
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    Answer

    Compound interest=P (1+I) ^-1

    Where P=principal

    I=norminal annual interest rate in percentage.

    ^=Compounding periods.

    Therefore,

    #12,000 (1 + 0.08) 20

    =12,000 (1.08) ^20

    =12,000 (4.660_1)

    =12,000 (3.666)

    =43,920

    In twenty years, I will have #43,920 dollars.
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