How much must you invest at 8% interest in order to see your investment grow to $8,000 in 10 years?
A) $3,070
B) $3,704
C) $3,105
D) none of these

Question

Quizplus · Accepted Answer

This is a straightforward application of the compound interest formula A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the interest rate, n is the number of times interest is compounded per year, and t is the number of years. In this case, we have:

A = $8,000
r = 8% or 0.08
n = 1 (interest is compounded annually)
t = 10 years

So we can solve for P as:

P = A/(1 + r/n)^(nt) = $8,000/(1 + 0.08/1)^(1*10) = $3,703.82

The closest answer choice to this is B, which is $3,704. Therefore, the best choice is B.

How Much Must You Invest at 8% Interest in Order