Question

How much will $500 be worth in 20 years if it earns interest compounded at 3.75%

Answer 1

Amount invested = $500

Time period = 20 years

Interest rate = 3.75%

Future value = Amount invested x (1 + i)ⁿ

= 500 x (1 + 3.75%)²⁰

= 500 (1 + 0.0375)²⁰

= 500 x (1.0375)²⁰

= 500 x 2.088152

= $1,044 (Rounded to nearest whole dollar)

Hence, $500 be $1,044 in 20 years if interest rate is 3.75%

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