00:01
In this question, you said that you deposit $400 today, $600 one year from now, and $800 five years from now in an account that earns 4 % interest compounded annually.
00:24
How much money will you have in 11 years? so when we're looking at this, the one deposited today will be compounded for all 11 years.
00:39
The one in one year, 10 years, and the one in five years, six years to get to the end of 11.
00:46
The formula that we need to use here is the compounding interest formula, where the amount equals the principal times one plus the interest rate over the number of times compounded per year raised to the number of times compounded times the number of years.
01:02
So let's do the 11 year first.
01:05
We have a principal of 400 times one plus the interest rate as a decimal, .04.
01:16
It says it's compounded annually, so your n is one, and this is for 11 years.
01:22
So 400 times one plus .04, 1 .04, raised to the power of 11.
01:31
You type this into your calculator exactly how it looks, 400 parentheses 1 .04 raised to the power of 11.
01:37
And we get $615 .78...