The managers of a company's pension fund invest the monthly employee contributions of $145,000 into a government fund paying 7.7%, compounded monthly.To what value (rounded to the nearest
Thousand) will the fund grow in 12 years?
A)$34,158,000
B)$34,166,000
C)$34,177,000
D)$34,176,000
E)$34,158,800

Question

Quizplus · Accepted Answer

The formula for compound interest is A=P(1+r/n)^nt, where A is the final amount, P is the principal (initial amount), r is the annual interest rate, n is the number of times the interest is compounded per year, and t is the time in years. Plugging in the values, we get A = 145000(1+0.077/12)^(12*12) = $34165972.16. Rounding to the nearest thousand gives us $34,166,000, which is answer choice B.

The Managers of a Company's Pension Fund Invest the Monthly