You put $5500 in a bond fund which has an annual yield of 4.8%. How much interest will be earned in 23 years?
Build the accumulation of principal. We multiply 5,500 times 1.048 raised to the 23rd power.
Future Value = 5,500 (1.048)^23
Future Value =5,500(2.93974392046)
Future Value = 16,168.59
The question asks for interest earned, so we find this below:
Interest Earned = Future Value - Principal
Interest Earned = 16,168.59 - 5,500
Interest Earned = 10,668.59
Build the accumulation of principal. We multiply 5,500 times 1.048 raised to the 23rd power.
Future Value = 5,500 (1.048)^23
Future Value =5,500(2.93974392046)
Future Value = 16,168.59
The question asks for interest earned, so we find this below:
Interest Earned = Future Value - Principal
Interest Earned = 16,168.59 - 5,500
Interest Earned = 10,668.59