A friend plans to buy a big-screen TV/entertainment system and can afford to set aside $1,320 toward the purchase today. If your friend can earn 5.0%, compounded yearly, how much can your friend spend in four years on the purchase? Round off to the nearest $1.
A) $1,444
B) $1,604
C) $1,764
D) $1,283

Question

Quizplus · Accepted Answer

The future value of the investment can be calculated using the formula: FV = PV * (1 + r)^n, where PV is the present value ($1,320), r is the interest rate (0.05), and n is the number of years (4). This results in approximately $1,604.

A Friend Plans to Buy a Big-Screen TV/entertainment System and Can