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Lee put $5,000 into a stock market index mutual fund that grew at an average of 6.5% per year for 10 years.Without any added deposits or withdrawals, about how much is in Lee’s mutual fund account after only 8 years, if you ignore compounding?
Shanese Bennett
Ignoring compounding the annual increase is 5000 * 0.065 = 325
So he gains $325 per year for eight years which is 325 * = 2600
2600 + 5000 = $7600 in total.
We could have skipped some steps by doing 5000 * (1+(8*0.065)), essentially multiplying the starting number by the final percentage increase.
Michael Scalise
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