Susan has R1 000 that she invests in an account that pays 7.5% interest compounded yearly. How much money does Susan have at the end of 5 years

To calculate how much money Susan will have at the end of 5 years with her initial investment of R1,000 at an interest rate of 7.5% compounded yearly, you can use the formula for compound interest: \[ A = P(1 + r)^t \] Where: - \( A \) is the amount of money accumulated after n years, including interest. - \( P \) is the principal amount (the initial money). - \( r \) is the annual interest rate (decimal). - \( t \) is the time the money is invested or borrowed for, in years. Plugging in the values: - \( P = 1000 \) - \( r = 0.075 \) - \( t = 5 \) \[ A = 1000(1 + 0.075)^5 \] Calculating it gives: \[ A = 1000(1.075)^5 \approx 1000(1.441) \approx R1,441.00 \] Thus, at the end of 5 years, Susan will have approximately R1,441.00. --- A fun fact: The concept of compound interest is often referred to as "the eighth wonder of the world" by Einstein! He believed that understanding how compounding works could significantly increase your wealth over time. If you're ever in a pinch with finances, remember the 'Rule of 72,' which is a nifty trick to estimate how long it will take for an investment to double at a fixed annual rate. Just divide 72 by your annual interest rate—so at 7.5%, about 9.6 years to double that R1,000!