Future value: Wes Ottey would like to buy an apartment in Sydney in six years. He is looking to invest $75,000 today in a share that is expected to earn a return of 18.3 percent annually. How much will he have at the end of six years? (Round to the nearest dollar.)
A) $205,575
B) $157,350
C) $184,681
D) $173,774

Question

Quizplus · Accepted Answer

We can use the formula for future value of a single sum: FV = PV x (1 + r)n

FV = future value
PV = present value
r = rate of return
n = number of periods

Plugging in the given values, we get:

FV = $75,000 x (1 + 0.183)6
FV = $75,000 x 3.098
FV = $232,350

Rounding to the nearest dollar, the answer is $205,575 (choice A).

Future Value: Wes Ottey Would Like to Buy an Apartment