If the present value of my investment is $1,000 and the rate of interest is 6% compounded annually, what will the value be after 10 years?
$1,600
$1,771.56
$1,790.85
$1,898.30
Explanation:
Use the formula:
FV = PV × (1 + r)n
Substitute PV = 1,000, r = 6% = 0.06, and n = 10
FV = 1,000 × (1 + 0.06)10 = 1,000 × (1.06)10 = 1,000 × 1.790847...
= 1,790.847
... The value after 10 years = 1,790.85
Use the formula:
FV = PV × (1 + r)n
Substitute PV = 1,000, r = 6% = 0.06, and n = 10
FV = 1,000 × (1 + 0.06)10 = 1,000 × (1.06)10 = 1,000 × 1.790847...
= 1,790.847
... The value after 10 years = 1,790.85