Dwayne plans to invest $4,700 in a savings account at the beginning of each of the next 12 years. If his opportunity cost rate is 7 percent compounded annually, how much will his investment be worth at the end of 12 years?
A)$87,542.29
B)$89,961.02
C)$91,250.52
D)$93,668.27
E)$84,075.72

Question

Quizplus · Accepted Answer

First, we need to calculate the value of Dwayne's investment at the end of 12 years using the future value formula:

FV = PMT * (((1 + r)^n - 1) / r)

where PMT is the yearly investment amount, r is the opportunity cost rate, and n is the number of years.

FV = 4,700 * (((1 + 0.07)^12 - 1) / 0.07)
FV = $89,961.02

Therefore, Dwayne's investment will be worth $89,961.02 at the end of 12 years. The best choice is B.

Dwayne Plans to Invest $4,700 in a Savings Account at the Beginning