Question
10
Multiple Choice
1 point
hboard
An investor deposited
- The account pays
- The investor leaves the money in the account for 2 years.
- The investor make no additional deposits or withdrawals.
What is the balance in the account at the end of 2 years?
$6,686.21
$6,484.06
History
5
88
6
Mastery
7
Clear my selection
Help
Previous
Multiple Choice
1 point
hboard
$6,686.21
$6,484.06
History
5
88
6
Mastery
7
Help
Previous
Ask by Byrd Chandler. in the United States
Jan 26,2025
Upstudy AI Solution
Tutor-Verified Answer
Answer
The balance in the account at the end of 2 years is approximately $6,478.20.
Solution
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Bonus Knowledge
To calculate the balance in the investment account at the end of 2 years with compounded interest, you can use the formula:
Where:
-
is the amount of money accumulated after n years, including interest. -
is the principal amount (the initial deposit or investment). -
is the annual interest rate (decimal). -
is the number of years the money is invested or borrowed for.
Plug in the values:
So, the balance in the account at the end of 2 years would be approximately
The world of investing owes much to historical figures like Benjamin Graham, who is often called the “father of value investing.” His principles encourage understanding the true value of an investment rather than chasing trends. By emphasizing fundamental analysis, Graham promoted smart investing long before term sheets became commonplace in wealth management.
In real-world application, knowing how to calculate compound interest empowers individuals to make informed decisions about savings and investment. Many people overlook the power of compounding; even modestly higher interest rates can result in significantly greater returns over time, turning that initial investment into a robust financial future!
