If Beth make an initial investment of $1,000,how much will it be worth after three years if her average return is 8.25% (use monthly compounding)?

Question

Quizplus · Accepted Answer

Using the formula for compound interest with monthly compounding:

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

where:
A = ending amount
P = initial investment
r = annual interest rate as a decimal (8.25% = 0.0825)
n = number of compounding periods per year (12 for monthly)
t = time in years

Plugging in the values, we get:

A = 1000(1 + (0.0825/12))^(12*3) = $1,279.74

The closest answer choice is C, therefore C is the best choice.

If Beth Make an Initial Investment of $1,000,how Much Will