Eastinghome Inc.just paid $8,000 to a landowner to explore for but not extract valuable minerals.If the landowner invests the money at a rate of 5.5% compounded annually for 7 years what is the investment worth at the end of that time period?
A)$5,499.49
B)$11,637.43
C)$56,000.00
D)$66,135.15

Question

Quizplus · Accepted Answer

The investment's future value can be calculated using the formula for compound interest: $FV = P(1 + r)^n$, where $FV$ is the future value, $P$ is the principal amount ($8,000), $r$ is the annual interest rate (5.5% or 0.055), and $n$ is the number of years (7). Plugging in the values: $FV = 8000(1 + 0.055)^7$, which calculates to approximately $11,637.43.