SOLUTION: Anna was pretty disappointed with how little money she would have and so she started looking at other investment options that involve higher risk but would also offer more possible

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Question 1151434: Anna was pretty disappointed with how little money she would have and so she started looking at other investment options that involve higher risk but would also offer more possible return. Her bank’s financial advisor suggested a mutual fund the she said was only moderately risky but had a record of 9.5% annual return.
Assuming the mutual fund preformed as well as it has in the past, how much would Anna’s investment of $2500 potentially be after 4 years if she decided to go with this option?
How much interest will be earned?
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
the mutual fund had an annual interest rate of 9.5%.
her investment was 2500.
the formula to use would be f = p * (1 + r) ^ n
f is the future value
p is the present value
r is the interest rate per time period (years in this case).
n is the number of time periods (years in this case).
the formula becomes:
f = 2500 * (1 + .095) ^ 4
solve for f to get:
f = 3594.152377.
the interest earned would be that minus 2500 = 1094.152377.