A two-year investment of $300 is made today at an annual interest rate of 4%.Which of the following statements is TRUE?
A)The PV is $277.37.
B)The FV is $224.72.
C)The FV is $324.48.
D)This question is irrelevant because there are no two-year investments that earn an average of 4% per year.

Question

Quizplus · Accepted Answer

Using the formula for future value of a lump sum, FV = PV(1 + r)^n, where PV is the present value, r is the annual interest rate, and n is the number of years, we can calculate the future value of the investment:

FV = $300 x (1 + 0.04)^2 = $324.48

Therefore, choice C, "The FV is $324.48," is the true statement.

A Two-Year Investment of $300 Is Made Today at an Annual