Robert plans to invest $650 in a savings account at the beginning of each of the next seven years. If his opportunity cost rate is 5 percent compounded annually, how much will his investment be worth at the end of seven years?

Question

Quizplus · Accepted Answer

Robert invests $650 at the beginning of each year for 7 years, so the total amount invested is $650 x 7 = $4,550.
The opportunity cost rate is 5% compounded annually, so the investment will be worth:
$4,550 x (1 + 0.05)^7 = $5,557.11 (rounded to the nearest cent)
Therefore, the best choice is C.

Robert Plans to Invest $650 in a Savings Account at the Beginning