At 12% interest (compounded annually),$20,000 invested today will grow to $________ in three years.
A)27,200
B)28,099
C)31,471
D)40,000

Question

Quizplus · Accepted Answer

To solve the problem, we can use the formula:

A = P(1 + r/n)^nt

where:
A = the future value of the investment
P = the present value of the investment
r = the annual interest rate (as a decimal)
n = the number of times the interest is compounded per year
t = the number of years

Plugging in the given values, we get:

A = 20,000(1 + 0.12/1)^(1*3)
A = 20,000(1.12)^3
A = 20,000(1.404928)
A = 28,098.56

Therefore, the answer is B, $28,099.

At 12% Interest (Compounded Annually),$20,000 Invested Today Will Grow to $________