# Compounding Interest

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?

Solution

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

32,071.35

So the $10,000 investment will amount to $32,071.35 in 20 years.

https://brainmass.com/business/interest-rates/compounding-interest-251219

#### 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.