$500 invested at 8% at the beginning of each of the next four years will grow to approximately $2,433.

Question

Quizplus · Accepted Answer

This statement is true. The future value of an annuity formula can be used to calculate the final amount. In this case, the formula would be FV = Pmt x (((1 + r)^n) - 1)/r, where Pmt is the annual payment ($500), r is the interest rate (8%), and n is the number of periods (4 years). Plugging in these values gives FV = $500 x (((1 + 0.08)^4) - 1)/0.08 = $2,433.12 approximately.

$500 Invested at 8% at the Beginning of Each of the Next