If the current rate of interest is 8%, then the future value (FV)of an investment that pays $1 000 per year and lasts 20 years is closest to:
A)$18 519
B)$20 000
C)$45 762
D)$9 818

Question

Quizplus · Accepted Answer

The formula for calculating future value is FV = PMT x (((1 + r)^n - 1) / r), where PMT is the annual payment, r is the interest rate, and n is the number of periods.

Using this formula, we get:

FV = 1000 x (((1 + 0.08)^20 - 1) / 0.08)
FV = 1000 x (45.7618)
FV = $45,762

Therefore, the closest future value is $45,762, which is option C.

If the Current Rate of Interest Is 8%, Then the Future