Which of the following choices is closest to the amount of money that must be invested today in order to have $25,000 at the end of four years if the rate of return is 12% compounded annually?
A) $15,900.
B) $17,100.
C) $19,900.
D) $22,300.
E) None of the answers is correct.

Question

Quizplus · Accepted Answer

The formula for the future value of an investment is:FV = PV * (1 + r)^nwhere:FV is the future valuePV is the present valuer is the annual interest raten is the number of yearsIn this case, we have:FV = $25,000r = 12% = 0.12n = 4Substituting these values into the formula, we get:$25,000 = PV * (1 + 0.12)^4$25,000 = PV * 1.5735PV = $25,000 / 1.5735PV = $15,900Therefore, the closest choice to the amount of money that must be invested today in order to have $25,000 at the end of four years if the rate of return is 12% compounded annually is A) $15,900.

Which of the Following Choices Is Closest to the Amount