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    Compounding Interest

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    I want to see in the precess where the 32071.35 came from
    The amount A of an investment of P dollars with annual interest rate r compounded
    annually for n years is given by the formula
    A + P(1 + r)n.

    Using the amount formula
    A teacher invested $10,000 in a bond fund that should have an average annual return
    of 6% per year for the next 20 years. What will be the amount of the investment in
    20 years?
    Use n = 20, P = $10,000, and r = 0.06 in the amount formula:
    A = P(1 + r)n
    A = 10,000(1 + 0.06)20
    = 10,000(1.06)20
    So the $10,000 investment will amount to $32,071.35 in 20 years.

    © BrainMass Inc. brainmass.com June 3, 2020, 10:49 pm ad1c9bdddf

    Solution Preview

    There is a problem in the formula given. Compound interest follows this formula:

    A = P * (1 + r)^n

    The interest is raised to the power of the years. Here ...

    Solution Summary

    This solution explains how to solve for compound interest.