At 09:17 PM 2/21/01 -0500, [EMAIL PROTECTED] wrote:
>Does anyone know a formula for determining the answer to the
following?
>If I have $2000 at 5% interest for 6 years, compounded annually what
will
>be either the final gross amount or the total amount of interest?
Either
>will suffice.
The formula is surprisingly simple:
Future value = PV * (1+IR) ^ n
where FV = future value
PV = present calue (2000)
IR = interest rate (expressed as decimal: 0.05)
n = number of compounding periods (6)
the ^ symbol is exponential (to the power of)
Plugging all in and you'll end up with at the end of 6 years:
2000 * (1.05) ^ 6 = 2680.19
You can see this for yourself if you do the math the brute-force way:
beginning of year interest end of year
1 2000.00 100.00 2100.00
2 2100.00 105.00 2205.00
3 2205.00 110.25 2315.25
4 2315.25 115.76 2431.01
5 2431.01 121.55 2552.56
6 2552.56 127.63 2680.19
total interest 680.19
Duc
