Mr Sooto makes an initial investment of 10000 for a period of 5years. Find the value of the investment after the 5 years, if the investment earns the return of 6% compounded annually

Answer 1

The formula for compound interest is:

A = P(1 + r/n)^nt

Where:
A = the total amount or value of the investment after the specified time
P = the principal amount or initial investment
r = the annual interest rate (as a decimal)
n = the number of times the interest is compounded per year
t = the time period (in years)

Here, P = 10000, r = 6% = 0.06, n = 1 (compounded annually), and t = 5.

Plugging in these values, we get:

A = 10000(1 + 0.06/1)^(1*5)
A = 10000(1.06)^5
A = 10000(1.338225)
A = 13382.25

Therefore, the value of the investment after 5 years is $13,382.25.