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12 June, 08:02

Brian Lee is planning to invest $23,000 today in a mutual fund that will provide a return of 11 percent each year. What will be the value of the investment in 10 years?

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  1. 12 June, 09:29
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    Answer: the value of the investment would be $65307 in 10 years

    Explanation:

    Initial amount that Lee invested is $23000 This means that the principal is

    P = 23000

    It was compounded annually. This means that it was compounded once in a year. So

    n = 1

    The rate at which the principal was compounded is 11%. So

    r = 11/100 = 0.11

    The duration of the investment is 10 years, So

    t = 10

    The formula for compound interest is

    A = P (1+r/n) ^nt

    A = total amount in the account at the end of t years. Therefore

    A = 23000 (1+0.11/1) ^1*10

    A = 23000 (1.11) ^10 = $65307
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