You decide to deposit $3,000 at a local bank for three years at a 6% rate of interest compounded semiannually.The future value of your investment is most nearly equal to ________.
A)$3,270
B)$3,540
C)$3,580
D)$3,618

Question

Quizplus · Accepted Answer

We can use the formula for compound interest, which is:

A = P(1 + r/n)^(nt)

Where:

A: the future value of the investment
P: the principal (initial investment)
r: the interest rate (as a decimal)
n: the number of times the interest is compounded per year
t: the time (in years)

Plugging in the given values, we get:

A = 3000(1 + 0.06/2)^(2*3)
A = 3580.22

Rounding to the nearest dollar, the answer is $3,580, which corresponds to choice C.

You Decide to Deposit $3,000 at a Local Bank for Three