An investment of 75,000 increases at a rate 12.5% per year. Find the value of the investment after 30 years.

A. $2,568,248

B. $1,438,883

C. $256,825

D. $243,549

Given that a n investment of 75,000 increases at a rate 12.5% per year. Find the value of the investment after 30 years.

Solution

The value after 30 years will be given by

A=P (1+r/100) ^n

where:

P=principple

r=rate

n=time

from the information:

P=75000, r=12.5%, n=time

thus plugging the values we obtain:

A=75000 (1+12.5/100) ^30

A=75000 (1.125) ^30

A=2,568,247.871

Answer: A. $2,568,248

For this case we have an equation of the form:

y = A * (b) ^ t

Where,

A: initial amount

b: growth rate

t: time

Substituting values we have:

y = 75000 * (1.125) ^ t

For 30 years we have:

y = 75000 * (1,125) ^ 30

y = 2568247.871

Rounding:

y = 2568248

Answer:

the value of the investment after 30 years is:

A. $ 2,568,248