You wish to make a sizeable down payment on a house and you currently have $18,325 invested at an annual rate of 4.75%. How much money will be in the account in 2.5 years if it continues to earn at its present rate?
A) $18,325
B) $19,464
C) $20,579
D) $20,605

Question

Quizplus · Accepted Answer

To find the future value of the investment, use the formula for compound interest: FV = P(1 + r/n)^(nt). Here, P = $18,325, r = 0.0475, n = 1 (compounded annually), and t = 2.5 years. Calculating gives FV = $18,325 * (1 + 0.0475)^2.5 ≈ $20,579.

You Wish to Make a Sizeable Down Payment on a House