To determine how much money you will have in a savings account after 10 years, given that you initially deposit [tex]$500 and make no further deposits, you need to calculate the future value of that single amount.
Let's break down the steps involved in making this decision:
1. Understand the Present Scenario: You are depositing a single amount of $[/tex]500 into a savings account, and you want to know its value after 10 years.
2. Identify the Relevant Concept:
- Future Value of a Single Amount: This calculation is used to determine how much a single deposit will grow to in the future, given a certain interest rate and period.
- Simple Interest: This involves interest calculations where the interest is not compounded. It's straightforward but less common for savings accounts over long periods.
- Present Value of a Single Amount: This calculation tells you the current value of a sum of money you expect to receive in the future. It’s the opposite of what you need in this scenario.
3. Choosing the Correct Calculation:
- Your scenario deals with wanting to know the end value of an initial deposit after a certain period.
- Consequently, you must use the Future Value of a Single Amount.
Thus, the type of calculation you should use to determine the value of the account in 10 years is Future value of a single amount.
