compound interest problem?

[anonymous05]

Alisha wanted to save enough money to make a down payment on a new home. She decided to put $10,000 into a savings account at the end of each of the next ten years. If she earns 4% compound interest, how much money will she have at the end of the ten years?

 

[Alfredo1]

u need to give more information on how many times its being compounded.


P(1+ r/n)^nt

P= present value =10000
r= interest rate= 4%=.04
t=years=10
n=the number of times it is compounded. ex monthly=12, yearly=1, daily=365, quarterly=4,semi annually= 2

 

[GilbelBN]

Find the Time Value of Money functions in Excel on your computer. They are a bit confusing, but you know the answer has to be > 10,000 x 10 as one check that you are using the right formula. I assume the 4% is compounded yearly since you did not specify otherwise. (But of course the standard in banks is monthly, so set your values accordingly.) Ditto the fact the deposit is made at Year End.

If you don't know how to properly use Bill Gate's confusing formulas, you can actually create a table yourself in Excel. In the old days they used to do it by hand.