To calculate the future value of a deposit with simple interest, we can use the formula:
Future Value (FV) = Principal Amount (P) + Interest (I)
Where:
- Principal Amount (P): This is the initial amount of money deposited, which in this case is $10,000.
- Interest (I): This is calculated using the formula I = P × r × t, where:
- r: the interest rate (as a decimal), so 6% would be 0.06.
- t: the time in years, which is 5 years.
Now, let’s calculate the interest:
I = $10,000 × 0.06 × 5
I = $10,000 × 0.30
I = $3,000
Now we can find the future value:
FV = P + I = $10,000 + $3,000
FV = $13,000
Therefore, the future value of a $10,000 deposit after 5 years at a 6% simple interest rate will be $13,000.