Suppose you invest $1,000 today,compounded quarterly,with the annual interest rate of 8.00%.What is your investment worth in one year?

Question

Quizplus · Accepted Answer

To calculate the future value of an investment using compound interest, we use the formula:

FV = PV * (1 + r/n)^(n*t)

where: 
FV = Future Value 
PV = Present Value 
r = Annual Interest Rate 
n = Number of times the interest is compounded per year 
t = Number of years

In this case, 
PV = $1,000 
r = 8.00% 
n = 4 (quarterly compounding) 
t = 1 year

Plugging in the values, we get:

FV = 1000 * (1 + 0.08/4)^(4*1) 
FV = $1,082.43

Therefore, the investment is worth $1,082.43 in one year, so the answer is C.

Suppose You Invest $1,000 Today,compounded Quarterly,with the Annual Interest Rate