Question

What is the future value of an investment with a 7% annual interest rate?

Answer 1

To calculate the future value of an investment, we typically use the future value formula:

\[
FV = P \times (1 + r)^n
\]

Where:
- \( FV \) = future value of the investment
- \( P \) = principal amount (initial investment)
- \( r \) = annual interest rate (as a decimal)
- \( n \) = number of years the money is invested for

To calculate the future value, you need to specify the principal amount and the number of years the investment is held.

For example, if you have an initial investment of $1,000 at a 7% annual interest rate for 5 years, the calculation would be as follows:

- \( P = 1000 \)
- \( r = 0.07 \)
- \( n = 5 \)

Plugging in the numbers:

\[
FV = 1000 \times (1 + 0.07)^5
\]

Calculating this step-by-step:

1. Calculate \( (1 + 0.07) = 1.07 \)
2. Raise to the power of 5: \( 1.07^5 \approx 1.402552 \)
3. Multiply by the principal:

\[
FV \approx 1000 \times 1.402552 \approx 1402.55
\]

So, the future value of a $1,000 investment at a 7% annual interest rate over 5 years is approximately $1,402.55.

If you provide the specific principal amount and duration, I can help you calculate the exact future value.