Robert plans to invest $650 in a savings account at the beginning of each of the next seven years. If his opportunity cost rate is 5 percent compounded annually, how much will his investment be worth at the end of seven years?

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aristeus aristeus · Answer 1 · 2020-02-05T06:42:56+01:00

Answer:

Amount after 7 years will be equal to $914.615

Explanation:

We have given initial investment P = $650

It is given it is compounded annually with rate 5%

So rate of interest r = 5%

Time period is given n = 7 years

We have to find the amount after 7 years

Future value is given by [tex]A=P(1+\frac{r}{100})^n[/tex], here A is future value P is initial investment r is rate of interest and n is time period

So [tex]A=650(1+\frac{5}{100})^7[/tex]

[tex]A=650\times 1.05^7[/tex]

[tex]A=650\times 1.4071[/tex]

[tex]A=914.615[/tex]

So the amount after 7 years will be $914.615