What amount will be in an 8% bank account three years from now if £6,000 is invested each year for four years with the first investment to be made today?
A) (£6,000 × 1.260) + (£6,000 × 1.166) + (£6,000 × 1.080) + £6,000
B) £6,000 × 1.360 × 4
C) (£6,000 × 1.080) + (£6,000 × 1.166) + (£6,000 × 1.260) + (£6,000 × 1.360)
D) £6,000 × 1.080 × 4

Question

Quizplus · Accepted Answer

The correct answer is A because it accounts for the compound interest on each £6,000 investment at an 8% annual rate over the different periods they are invested. The first £6,000 is invested for four years, the second for three years, the third for two years, and the last for one year. The formula used calculates the future value of each investment separately and then sums them up.

What Amount Will Be in an 8% Bank Account Three