If you invest $1,000 in a security that provides a return of 3% the first year, 4% the second year, and 5% the third year, the value of your investment at the end of the third years is closest to:
A) $0
B) $1,000.00
C) $1,124.76
D) $1,200.00

Question

Quizplus · Accepted Answer

To calculate the value of the investment at the end of the third year, you apply the given percentages one after the other on the initial amount. After the first year, the investment grows by 3%, making it $1,000 * 1.03 = $1,030. After the second year, it grows by 4%, making it $1,030 * 1.04 = $1,071.20. After the third year, it grows by 5%, making it $1,071.20 * 1.05 = $1,124.76.

If You Invest $1,000 in a Security That Provides a Return