If you have $1000 to invest and are able to earn 8% p.a.interest on money invested in a bank,how much will you be willing to receive in two years' time to be indifferent between the two options?
A)$840
B)$1160
C)$1166
D)$1500

Question

Quizplus · Accepted Answer

To find the future value of an investment, you can use the formula FV = PV(1 + r)^n, where FV is the future value, PV is the present value, r is the annual interest rate, and n is the number of years. Plugging in the values: FV = $1000(1 + 0.08)^2 = $1000 * 1.1664 = $1166.

If You Have $1000 to Invest and Are Able to Earn