Question

What is $25,000 at 8% for 5 years?

Answer 1

`$35000`.

Explanation:

Although there is no context, there is no mention of "compounding" and annuities (words like "monthly payment" indicates an annuity). Therefore, the only formula we can use is `I=Prt`.

=> Where `I` is the interest - money earned.
=> Where `P` is the principal - money deposited.
=> Where `R` is the rate - given as a decimal.
=> Where `T` is the time (years).

`I=P*R*T`

`I=25000 xx 0.08 xx 5`

`I=10000`

Now we add the interest to the deposited principal to get the total.

`T=P+I`

`T=25000+10000`

`T=35000`

Therefore, after `5` years, the investment is worth `$35000`.

Hope this helps :)