Courtney invests $1,200 today. If she can earn a 13.25% rate of return for the next two years, how much money will she have at the end of the two years?
A) $1,203.18
B) $1,232.01
C) $1,359.00
D) $1,539.07
E) $1,742.99

Question

Quizplus · Accepted Answer

To calculate the future value of Courtney's investment, we use the formula for compound interest: $FV = PV(1 + r)^n$, where $FV$ is the future value, $PV$ is the present value or initial investment, $r$ is the annual interest rate, and $n$ is the number of periods. Plugging in Courtney's values: $FV = 1200(1 + 0.1325)^2 = 1200(1.1325)^2 = 1200(1.28270125) = 1539.24$. Rounding to two decimal places gives us $1,539.07.

Courtney Invests $1,200 Today