CCSS.HSA.SSE.B.3.Q.A1.CI.O - If the present value of my investment is $1,000 and the rate of interest is 10% compounded annually, what will the value be after 6 years?

Sangeetha Pulapaka (last edited 4 years ago) (Expert, Educator @Qalaxia)

STEP 1: Recall what is principal amount

STEP 2: Recall what is interest/simple interest

STEP 3: Recall what is compound interest

STEP 4: Use the compound interest formula

Use the formula:

FV = PV × (1 + r)ⁿ

Substitute PV = $1,000, r = 10% = 0.10 and n = 6

FV = $1,000 × (1 + 0.10)⁶ = $1,000 × (1.10)⁶ = $1,000 × 1.771561 = $1,771.561

So the value after 6 years = $1,771.56