You invest $1,000 at age 20 at an annual rate of return of 12%.By the time you are 62 you will have amassed approximately
A)$47,040.
B)$67,214.
C)$116,723.
D)$504,000.

Question

Quizplus · Accepted Answer

We can use the compound interest formula to calculate the future value of the investment:

FV = PV x (1 + r)^n

where FV is the future value, PV is the present value (or principal), r is the annual interest rate, and n is the number of years.

In this case, we have:

PV = $1,000
r = 12% = 0.12
n = 62 - 20 = 42 (since we are investing for 42 years, from age 20 to age 62)

Substituting these values into the formula, we get:

FV = $1,000 x (1 + 0.12)^42 = $116,723 (rounded to the nearest dollar)

Therefore, the closest answer is (C) $116,723.

You Invest $1,000 at Age 20 at an Annual Rate