To calculate the future value of an investment, we can use the formula for compound interest, which is:
Future Value (FV) = P (1 + r)^n
Where:
- P = principal amount (initial investment)
- r = annual interest rate (in decimal)
- n = number of years the money is invested or borrowed
In this case, we have:
- P = $1000
- r = 10% = 0.10
- n = 2 years
Now, plugging in the values into the formula:
FV = 1000 (1 + 0.10)^2
FV = 1000 (1.10)^2
FV = 1000 * 1.21
FV = $1210
Therefore, an investment of $1000 today at a 10% interest rate for two years will result in a future value of $1210.