Milner Company will invest €400,000 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 The investment will earn 6% for 5 years, with no funds withdrawn.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

The amount of the investment after 5 years can be calculated using the formula:

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

where:
P = €400,000 (the initial investment)
r = 6% (the interest rate)
n = 1 (since interest is compounded annually)
t = 5 (the number of years)

A = 400,000(1 + 0.06/1)^(1*5)
A = 400,000(1.338226)
A = €535,292

Therefore, the best choice is C, €535,292.

Milner Company Will Invest €400,000 Today