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An IRA is expected to earn a about $5 \%$ each year. What will an initial $\$ 1000$ investment be worth in (a) 10 years, (b) 25 years?

(a) $\$ 1628.89$(b) $\$ 3386.35$

Algebra

Chapter 4

Exponential and Logarithmic Functions

Section 2

Exponential Functions

McMaster University

Harvey Mudd College

Baylor University

Idaho State University

Lectures

04:06

The value of an asset, cur…

02:04

If 10,000 dollar is invest…

If 500 dollar is invested …

03:47

If you invest $£ 1000$ on…

So if we want, um, to figure out how much money we're gonna have after 10 and 25 years, we can just go ahead and use our equation. Um, since I assume this is a continuous interest, um, so we'll just use the equation we've been using, so just be peanut One plus are raised to the teeth. So in this case, since we're earning, our rates should be positive. So we just divide that by 100 to get into a decimal, and then our initials of thousands would be 1000 and then one plus 0.5 race the T, so that would be 1000 times 1.5 Raciti. So now we can go ahead and plug in 10 and 25 into here, and that should be how much money. So we would have so 1.5 races in times 1000. So I'm just going around this to the nearest sent. So it would be $1628.89 and then after 25 years, so we plug in 25 instead. So one point oh five raised to 25 times 1000. This should be around 3086.35 Columns are $3306.35.

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