Calculate, to the nearest cent, the future value of an investment of $28,000 at 10.45% per year, compounded monthly, after 14 years.
A) $F V = \$ 120,165.64$
B) $F V = \$ 112,584.37$
C) $F V = \$ 821,798.19$
D) $F V = \$ 31,613.79$
E) $F V = \$ 45,502.17$

Question

Calculate, to the nearest cent, the future value of an investment of $28,000 at 10.45% per year, compounded monthly, after 14 years. 
A) $F V = \$ 120,165.64$
B) $F V = \$ 112,584.37$
C)  $F V = \$ 821,798.19$
D)  $F V = \$ 31,613.79$
E)  $F V = \$ 45,502.17$

Quizplus · Accepted Answer

The future value $FV$ of an investment is calculated using the formula $FV = P(1 + \frac{r}{n})^{nt}$, where $P$ is the principal amount (\$28,000), $r$ is the annual interest rate (10.45% or 0.1045), $n$ is the number of times the interest is compounded per year (12, since it's compounded monthly), and $t$ is the time the money is invested for (14 years). Plugging these values into the formula gives $FV = 28000(1 + \frac{0.1045}{12})^{12*14}$, which calculates to approximately \$120,165.64.

Calculate, to the Nearest Cent, the Future Value of an Investment