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Haley invested $750 into a mutual fund that paid 3.5% interest
each year compounded annually. Find the value of the mutual
fund in 15 years.

Sagot :

Lanuel

The future value of the mutual  fund after 15 years is equal to $1,256.55.

Given the following data:

  • Principal = $5,000
  • Interest = 3.5% = 0.035
  • Time = 15 years

To find the future value of the mutual  fund after 15 years:

Mathematically, compound interest is given by the formula:

[tex]A = P(1 + \frac{r}{n})^{nt}[/tex]

Where;

  • A is the future value.
  • P is the principal or starting amount.
  • r is annual interest rate.
  • n is the number of times the interest is compounded in a year.
  • t is the number of years for the compound interest.

Substituting the given parameters into the formula, we have;

[tex]A = 750(1 + 0.035)^{15}\\\\A = 750(1.035)^{15}\\\\A = 750(1.6754)[/tex]

Future value, A = $1,256.55

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