Solution:
Given, principal P = $10,000
n = 2 years
r = 6%
We have to find the future value with simple interest.
Simple interest, SI = Pnr/100
So, SI = (10,000)(2)(6)/100
= 100(12)
= $1200
Future value = SI + P
So, future value = 1200 + 10000
Future value = $11200
Therefore, future value is $11200.
Summary:
The future value of $10,000 on deposit for 2 years at 6% simple interest is $11200.
Certainly! The concept described in the article you've shared revolves around simple interest and the calculation of future value based on principal amount, time, and interest rate. Here's a breakdown of the concepts involved:
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Principal (P): This refers to the initial amount of money invested or borrowed, which in this case is $10,000.
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Time (n): It represents the duration for which the principal amount is invested or borrowed. In this scenario, the time is 2 years.
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Interest Rate (r): It signifies the rate at which interest is applied to the principal amount. Here, the interest rate is 6%.
The formula for calculating simple interest is: [ \text{Simple Interest (SI)} = \frac{P \times n \times r}{100} ]
Given the values: [ \text{SI} = \frac{10,000 \times 2 \times 6}{100} = \frac{120,000}{100} = $1200 ]
The future value (FV) can be obtained by adding the simple interest to the principal amount: [ \text{Future Value (FV)} = \text{SI} + P = $1200 + $10,000 = $11,200 ]
Therefore, the future value of $10,000 deposited for 2 years at a 6% simple interest rate is $11,200.
In essence, the key concepts involved here are principal amount, time duration, interest rate, calculation of simple interest using the formula, and determining the future value by adding the calculated simple interest to the principal amount.
Understanding these concepts helps in financial planning, investments, and understanding the growth or returns on a certain amount of money over time when subjected to simple interest.
