If you invest $10,000 today at an annual interest rate of 10%, compounded yearly, you can use the formula for compound interest to calculate the future value of your investment.
The formula is:
A = P (1 + r)^n
Where:
- A = the amount of money accumulated after n years, including interest.
- P = the principal amount (the initial amount of money).
- r = annual interest rate (decimal).
- n = number of years the money is invested or borrowed.
Plugging in the values:
- P = 10,000
- r = 0.10 (which is 10% as a decimal)
- n = 10
Using the formula:
A = 10,000 (1 + 0.10) ^ 10
A = 10,000 (1.10) ^ 10
A = 10,000 * 2.59374
A ≈ 25,937.40
So, after 10 years, your investment of $10,000 at a 10% interest rate will grow to approximately $25,937.40.