Suppose you put $475 into a bank account today. Interest is paid annually and the annual interest rate is 4.25 percent. The future value of the $475 after 3 years is
A)$419.24.
B)$441.87.
C)$610.57.
D)$538.17.

Question

Quizplus · Accepted Answer

The future value (FV) of an investment is calculated using the formula FV = PV(1 + r)^n, where PV is the present value, r is the annual interest rate (as a decimal), and n is the number of periods. Here, PV = $475, r = 4.25% or 0.0425, and n = 3 years. Plugging these values into the formula gives FV = $475(1 + 0.0425)^3 = $538.17.

Suppose You Put $475 into a Bank Account Today