To determine how much you will have after investing $10,000 for ten years at an annual interest rate of 10%, we can use the formula for compound interest, which 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 = the annual interest rate (decimal).
- n = the number of years the money is invested or borrowed for.
In this case:
- P = $10,000
- r = 10/100 = 0.10
- n = 10
Now, we can plug the values into the formula:
A = 10,000 (1 + 0.10)^10
A = 10,000 (1.10)^10
A = 10,000 × 2.59374
A ≈ $25,937.42
After 10 years, your $10,000 investment at an annual interest rate of 10% will grow to approximately $25,937.42. This demonstrates the power of compound interest, where your investment grows exponentially over time!