Future value
F=P(1+i)^n
where
P=present value=10000
i=annual interest rate
n=number of years={15,20,30}
At 12% interest rate, i=0.12,
After 15 years,
[tex]F=P(1+i)^15=10000(1.12)^15=54735.66[/tex]
After 20 years,
[tex]F=P(1+i)^20=10000(1.12)^20=96462.93[/tex]
After 30 years,
[tex]F=P(1+i)^20=10000(1.12)^30=299599.22[/tex]
At 6% interest rate, i=0.06,
After 15 years,
[tex]F=P(1+i)^15=10000(1.06)^15=23965.58[/tex]
After 20 years,
[tex]F=P(1+i)^20=10000(1.06)^20=32071.35[/tex]
After 30 years,
[tex]F=P(1+i)^20=10000(1.06)^30=57434.91[/tex]
The results show clearly the power of compounding increases drastically with time.
