Which of the following best expresses the payment a saver receives for investing their money for two years?
A) PV + PV
B) PV + PV (1 + i)
C) PV(1 + i)²
D) 2PV(1 + i)

Question

Quizplus · Accepted Answer

The formula for calculating the future value of an investment with compound interest is FV = PV(1 + i)n, where PV is the present value, i is the interest rate, and n is the number of periods. In this case, the investment is for two years, so n = 2. Therefore, the formula for the future value after two years is FV = PV(1 + i)². Since the question is asking for the payment a saver receives, it is assuming that the investment has matured and is being redeemed. Hence, the amount the saver receives is the future value of the investment, which is given by the formula above.

Which of the Following Best Expresses the Payment a Saver