Question

the expression 1000(1.1)^t represents the value of a $1000 investment that earns 10% interest per year, compounded annually for 2 years. What is the value of a $1000 investment at the end of each year ?

Answer 1

Year 1: $1,100

Year 2: $ 1,210

Explanation:

The given expresion is:

`1000(1.1)^(t)`

This represents the value of a $1000 investment that earns 10% interest per year, compounded annually for 2 years.

To find the value of a $1000 investment at the end of the first year , we substitute t=1.

`1000(1.1)^(1) = 1100 \: dollars`

To find the value of a $1000 investment at the end of the second year , we substitute t=2.

`1000( {1.1)}^(2) = 1210 \: dollars`