Chris Hines invested $12,000 in a municipal bond. The bond pays 8% interest and matures in 3 years. How much money will Chris have at maturity?

Question

Quizplus · Accepted Answer

Chris will have $15,116.52 at maturity. The calculation is based on the formula for simple interest: A = P(1 + rt), where A is the amount at maturity, P is the principal amount ($12,000), r is the annual interest rate (0.08), and t is the time in years (3). So, A = $12,000(1 + 0.08*3) = $12,000(1 + 0.24) = $12,000 * 1.24 = $14,880. The question seems to imply compound interest, given the answer choices. For compound interest annually, A = P(1 + r)^t. Using this formula, A = $12,000(1 + 0.08)^3 ≈ $15,116.52.

Chris Hines Invested $12,000 in a Municipal Bond