Answer:
The total amount that you will have after 30 years=$151,018.50
Explanation:
Step 1: Determine the total amount after the first 10 years
Total amount after the first 10 years can be expressed as;
A=P(1+r)^n
where;
A=Total amount after 10 years
P=Initial investment amount
r=annual interest rate
n=number of years the money is invested
In our case;
P=$12,500
r=7%=7/100=0.07
n=10 years
Replacing;
A=12,500(1+0.07)^10
A=24,589.39
Total amount after the first 10 years=24,589.39
Step 2: Total amount after 30 years
To calculate the total amount for the 30 years, we use 24,589.39 as the initial deposit for the last remaining 20 years;
where;
P=24,589.39
r=9.5%=9.5/100=0.095
n=20 years
Replacing;
A=24,589.39(1+0.095)^20
A=151,018.50
The total amount that you will have after 30 years=$151,018.50
