Jensen Company will invest $200,000 today.The investment will earn 6% for 5 years, with no funds withdrawn.In 5 years, the amount in the investment fund is

Question

Quizplus · Accepted Answer

We can use the formula for compound interest to find the amount in the investment fund after 5 years:

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

where:
A = amount in investment fund after time t
P = principal investment (initial amount) = $200,000
r = annual interest rate (as a decimal) = 6% = 0.06
n = number of times the interest is compounded per year = 1 (assuming annual compounding)
t = time in years = 5

Plugging in the values, we get:

A = $200,000(1 + 0.06/1)^(1*5)
A = $200,000(1.338225)
A = $267,645.04

Therefore, the best choice is C, which is the closest to the calculated amount of $267,645.04.

Jensen Company Will Invest $200,000 Today