Answer
$70,123
Step-by-step explanation:
Data:
Present Value (PV) : 52,400
Interest rate (r) : 6%
Years (n): 5
Formula:
a) [tex]FV=P(\frac{(1+r)^{n}-1 }{r})[/tex]
b) [tex]P=\frac{r(PV)}{1-(1-r)^{-n} }[/tex]
Replacing the values on the formula (b) we have that
[tex]P=\frac{0.06(52400)}{1-(1-0.06)^{-5} }[/tex] = 12439.57
Now that we know the value of P we can replace it on (a)
[tex]FV=12439.57(\frac{(1+.06)^{5}-1 }{.06})[/tex] = 70,123
The total return on the investment of $52,400 with the rate of 6% compounded annually for 5 years is $70,123.
Compound interest is the amount charged on the principal amount and the accumulated interest with a fixed rate of interest for a time period.
The formula for the final amount with the compound interest formula can be given as,
[tex]A=P\times\left(1+\dfrac{r}{n\times100}\right)^{nt}\\[/tex]
Here, A is the final amount (principal plus interest amount) on the principal amount P of with the rate r of in the time period of t.
The invested amount is $52,400 with the rate of 6% compounded annually.
The time period is 5 years. The total return on this investment is,
[tex]A=52400\times\left(1+\dfrac{6}{100}\right)^{5}\\A\approx70123[/tex]
Hence, the total return on the investment of $52,400 with the rate of 6% compounded annually for 5 years is $70,123.
Learn more about the compound interest here;
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