Problema Solution
Rachael is already looking ahead to graduation and a job, and she wants to buy a new car not long after her graduation. If after graduation she begins an investment program of $2,400 per year in an investment yielding 6 percent, what will be the value of the fund after three years?
Answer provided by our tutors
P = $2,400 the principal
r = 0.06 or 6% annual interest rate
t = 3 years
n = 1*t = 1*3 = 3 compounding periods (the account is compounded annualy)
A = future value
A = P(1 + r)^n
A = 2400(1 + 0.06)^3
A = $2,858.44
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after 3 years the value of the fund will be $2,858.44.