Future value: You are interested in investing $10,000, a gift from your grandparents, for the next four years in a managed fund that will earn an annual return of 8 percent. What will your investment be worth at the end of four years? (Round to the nearest dollar.)
A) $10,800
B) $13,605
C) $13,200
D) $12,400

Question

Quizplus · Accepted Answer

Using the formula for future value of a lump sum, we can calculate:
FV = PV x (1 + r)^n
Where:
PV = Present Value = $10,000
r = Annual interest rate = 8% = 0.08
n = Number of years = 4
FV = $10,000 x (1 + 0.08)^4 = $13,604.93
Rounding to the nearest dollar, the answer is $13,605, which is option B.

Future Value: You Are Interested in Investing $10,000, a Gift