Jane wants to set aside funds to take an around the world cruise in four years. Assuming that Jane has $12,000 to invest today in an account expected to earn 6% per annum, how much will she have to spend on her vacation?
A) $9,504.
B) $15,150.
C) $52,495.
D) $16,059.

Question

Quizplus · Accepted Answer

To calculate the future value of Jane'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 ($12,000), r is the annual interest rate (6% or 0.06), and n is the number of years (4). Plugging in the values, we get FV = $12,000(1 + 0.06)^4 = $12,000(1.2625) = $15,150.

Jane Wants to Set Aside Funds to Take an Around