Question

Assuming you have that same $50,000, but you choose to invest it for 10 years in an investment which earns 10% interest, but compounds annually. What is the Future Value of this investment? (When rounding in each step, when applicable please round to the nearest hundredth. i.e. two decimal places: 3.45.)

Answer 1

1st year ending balance = 50,000 + 10%of 50,000 = 55,000

2nd year ending balance = 55,000 + 10%of 55,000 = 60,500

3rd year ending balance = 60,500 + 10%of 60,500 = 66,550

4th year ending balance = 66,550 + 10%of 66,550 = 73,205

5th year ending balance = 73,205 + 10%of 73,205 = 80,525.50

6th year ending balance = 80,525.50 + @10% of 80,525.50 = 88,578.05

7th year ending balance = 88,578.05 + 10%of 88,578.05 = 97,435.86

8th year ending balance = 97,435.86 + 10%of 97,435.86 = 107,179.44

9th year ending balance = 107,179.44 + 10%of 107,179.44 = 117,897.38

10th year ending balance = 117,897.38 + 10%of 117,897.38 = 129,687.12

Therefore the future value of the investment will be = $129,687.12

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