If money is invested for 3 years with interest compounded annually, the future value of the investment varies directly as the cube of $1 + r$ r, where r is the interest rate. If the future value of the investment is $9317.00 when the
Rate is 10%, what rate gives a future value of $8575.30? Round to the nearest whole percent.
A) 6%
B) 8%
C) 7%
D) 9%

Question

Quizplus · Accepted Answer

The future value of an investment with compound interest is given by the formula $FV = P(1 + r)^n$, where $P$ is the principal amount, $r$ is the annual interest rate, $n$ is the number of years, and $FV$ is the future value. Given that the future value varies directly as the cube of $1 + r$, we can set up a proportion based on the given values to find the unknown rate. For a 10% rate resulting in a future value of $9317, and an unknown rate resulting in a future value of $8575.30, we solve for the new rate. The correct rate that gives a future value of $8575.30, when rounded to the nearest whole percent, is 7%.

If Money Is Invested for 3 Years with Interest Compounded 1+r1 + r1+r

If Money Is Invested for 3 Years with Interest Compounded $1 + r$