Adam plans to invest $1500 today in a mutual fund. If he earns 12 percent interest compounded monthly, to what amount will his investment grow in 20 years?
A)$17,289
B)$15,897
C)$16,339
D)$12,450
E)$18,546

Question

Quizplus · Accepted Answer

We can use the formula A=P(1+r/n)^nt, where:
A = the future value of the investment
P = the principal investment amount (in this case, $1500)
r = the annual interest rate (12%)
n = the number of times the interest is compounded per year (12, since it is compounded monthly)
t = the number of years (20)

Plugging in these values, we get:
A = 1500(1+0.12/12)^(12*20)
A = 1500(1.01)^240
A = $16,339.41

Therefore, the answer is C, $16,339.

Adam Plans to Invest $1500 Today in a Mutual Fund