To calculate the future value of a deposit with simple interest, we can use the formula:
Future Value (FV) = Principal + (Principal × Rate × Time)
Here:
- Principal = $10,000
- Rate = 6% = 0.06 (as a decimal)
- Time = 5 years
Now, substituting these values into the formula:
FV = 10,000 + (10,000 × 0.06 × 5)
Calculating the interest:
10,000 × 0.06 × 5 = 3,000
Now, adding the interest to the principal:
FV = 10,000 + 3,000 = 13,000
Therefore, the future value of $10,000 on deposit for 5 years at 6% simple interest is $13,000.