If you invest $3,000 today at 8% compounded interest for three years, the value of the investment to the nearest dollar at the end of the three years will be:
A) $3,000
B) $3,240
C) $3,720.
D) $3,779.
E) $4,081.

Question

Quizplus · Accepted Answer

The value of the investment can be calculated using the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount ($3,000), r is the annual interest rate (8% or 0.08), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years. Assuming the interest is compounded annually (n=1), the formula simplifies to A = 3000(1 + 0.08)^3. Calculating this gives A ≈ $3,779.

If You Invest $3,000 Today at 8% Compounded Interest for Three