Given:
[tex]P=\$120,000[/tex]
[tex]r=5.3\%[/tex]
[tex]t=8\text{ years}[/tex]
To find:
The value of the investment when the interest is compounded annually.
Solution:
The formula for amount is:
[tex]A=P\left(1+\dfrac{r}{n}\right)^{nt}[/tex]
Where, P is the principal, r is the rate of interest in decimal, n is the number of time interest compounded in an years, and t is the number of years.
The interest is compounded annually. So, [tex]n=1[/tex].
Substituting [tex]P=120000, r=0.053, n=1, t=8[/tex] in the above formula, we get
[tex]A=120000\left(1+\dfrac{0.053}{1}\right)^{1(8)}[/tex]
[tex]A=120000\left(1.053\right)^{8}[/tex]
[tex]A=181387.85936[/tex]
[tex]A\approx 181387.86[/tex]
Therefore, the value of the investment after 8 years is $181,387.86.
