Which of the following amounts is closest to the end value of investing $5,000 for 14 months at a stated annual interest rate of 6 percent compounded monthly?
A) $5,352
B) $5,362
C) $5,350
D) $5,293
E) $6,183

Question

Quizplus · Accepted Answer

The end value of an investment can be calculated using the formula:FV = PV * (1 + r/n)^(n*t)where:PV is the present value (the initial investment)r is the annual interest raten is the number of times per year that the interest is compoundedt is the number of yearsIn this case, we have:PV = $5,000r = 6% = 0.06n = 12 (since the interest is compounded monthly)t = 14/12 = 1.1667 (since there are 14 months in 1.1667 years)Plugging these values into the formula, we get:FV = $5,000 * (1 + 0.06/12)^(12*1.1667)= $5,000 * (1.005)^14= $5,362.04Therefore, the end value of the investment is closest to $5,362, which is choice B.

Which of the Following Amounts Is Closest to the End