Homework Help is Here – Start Your Trial Now!
Math
Algebra
At an interest rate of 10% per year, $100,000 today is equivalent to how much a year from now?

At an interest rate of 10% per year, $100,000 today is equivalent to how much a year from now?

Algebra and Trigonometry (6th Edition)
Algebra and Trigonometry (6th Edition)
6th Edition
ISBN:9780134463216
Author:Robert F. Blitzer
Publisher:Robert F. Blitzer
ChapterP: Prerequisites: Fundamental Concepts Of Algebra
Section: Chapter Questions
Problem 1MCCP: In Exercises 1-25, simplify the given expression or perform the indicated operation (and simplify,...
See similar textbooks
icon
Related questions
Question
**Financial Education Problem** **Problem 3-4: Calculating Future Value with Interest Rate** **Question:** At an interest rate of 10% per year, $100,000 today is equivalent to how much a year from now? **Contributors:** This problem was contributed by Hamed Kashani, Saeid Sadri, and Baabak Ashuri from the Georgia Institute of Technology. This question is an example of calculating the future value of an investment or amount of money given a specific annual interest rate. The problem focuses on understanding how much a principal amount will grow in one year given the interest rate. ### Concept Explanation To solve this, you can use the future value formula for simple interest: \[ \text{Future Value} = \text{Present Value} \times (1 + \text{Interest Rate}) \] Given: - Present Value = $100,000 - Interest Rate = 10% per year or 0.10 in decimal form Plugging the values into the formula, you get: \[ \text{Future Value} = 100,000 \times (1 + 0.10) \] \[ \text{Future Value} = 100,000 \times 1.10 \] \[ \text{Future Value} = 110,000 \] So, at an interest rate of 10% per year, $100,000 today will be equivalent to $110,000 a year from now. ### Application Understanding this calculation is essential in financial planning, investment analysis, and comprehending how interest rates affect the growth of an investment over time. By mastering these concepts, students can make informed financial decisions and better anticipate the future value of their investments or savings. --- *Note: No graphs or diagrams were included in the referenced image.*
Transcribed Image Text:**Financial Education Problem** **Problem 3-4: Calculating Future Value with Interest Rate** **Question:** At an interest rate of 10% per year, $100,000 today is equivalent to how much a year from now? **Contributors:** This problem was contributed by Hamed Kashani, Saeid Sadri, and Baabak Ashuri from the Georgia Institute of Technology. This question is an example of calculating the future value of an investment or amount of money given a specific annual interest rate. The problem focuses on understanding how much a principal amount will grow in one year given the interest rate. ### Concept Explanation To solve this, you can use the future value formula for simple interest: \[ \text{Future Value} = \text{Present Value} \times (1 + \text{Interest Rate}) \] Given: - Present Value = $100,000 - Interest Rate = 10% per year or 0.10 in decimal form Plugging the values into the formula, you get: \[ \text{Future Value} = 100,000 \times (1 + 0.10) \] \[ \text{Future Value} = 100,000 \times 1.10 \] \[ \text{Future Value} = 110,000 \] So, at an interest rate of 10% per year, $100,000 today will be equivalent to $110,000 a year from now. ### Application Understanding this calculation is essential in financial planning, investment analysis, and comprehending how interest rates affect the growth of an investment over time. By mastering these concepts, students can make informed financial decisions and better anticipate the future value of their investments or savings. --- *Note: No graphs or diagrams were included in the referenced image.*
Expert Solution
steps

Step by step

Solved in 3 steps with 3 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
Algebra and Trigonometry (6th Edition)
Algebra and Trigonometry (6th Edition)
Algebra
ISBN:
9780134463216
Author:
Robert F. Blitzer
Publisher:
PEARSON
Contemporary Abstract Algebra
Contemporary Abstract Algebra
Algebra
ISBN:
9781305657960
Author:
Joseph Gallian
Publisher:
Cengage Learning
Linear Algebra: A Modern Introduction
Linear Algebra: A Modern Introduction
Algebra
ISBN:
9781285463247
Author:
David Poole
Publisher:
Cengage Learning
Algebra And Trigonometry (11th Edition)
Algebra And Trigonometry (11th Edition)
Algebra
ISBN:
9780135163078
Author:
Michael Sullivan
Publisher:
PEARSON
Introduction to Linear Algebra, Fifth Edition
Introduction to Linear Algebra, Fifth Edition
Algebra
ISBN:
9780980232776
Author:
Gilbert Strang
Publisher:
Wellesley-Cambridge Press
College Algebra (Collegiate Math)
College Algebra (Collegiate Math)
Algebra
ISBN:
9780077836344
Author:
Julie Miller, Donna Gerken
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS