You want to go to europe 5 years from now, and you can save $3,100 per year, beginning one year from today. you plan to deposit the funds in a mutual fund that you think will return 8.5% per year. under these conditions, how much would you have just after you make the 5th deposit, 5 years from now?

Question

Mathematics

London Fox

27 December, 01:10

You want to go to europe 5 years from now, and you can save $3,100 per year, beginning one year from today. you plan to deposit the funds in a mutual fund that you think will return 8.5% per year. under these conditions, how much would you have just after you make the 5th deposit, 5 years from now?

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Caroline Mcintyre · Answer 1

This is the concept of application of compound interest, to calculate the amount I will have after the 5th deposit we proceed as follows;

A=p (1+r/100) ^n

where;

A=future amount

p=principle

r=rate

n=number of years

thus substituting the values in our formula we get:

A=3,100 (1+8.5/100) ^5

A=3,100 (1+0.085) ^5

A=3100 (1.085) ^5

A=4,666.34

The amount of money after 5 years will be $4,666.24