Using the practical method,what is the accumulated value of $20,000 over 7 years and 10 months if the investment earns interest at j₂ = 10%? A)$42,898.52 B)$42,953.22 C)$42,964.52 D)$44,350.47

Question

Quizplus · Accepted Answer

Using the formula for accumulated value with simple interest:

Accumulated value = Principal*(1+interest rate*time)

Where,
Principal = $20,000
Interest rate = 10% = 0.10
Time = 7 years and 10 months = 7.83 years

Accumulated value = $20,000*(1+0.10*7.83)
Accumulated value = $20,000*(1.783)
Accumulated value = $35,660

Therefore, the accumulated value of $20,000 over 7 years and 10 months at an interest rate of 10% is $35,660. However, we need to round off the answer to the nearest cent, which is:

Accumulated value = $35,660.00 ≈ $35,660.52

Hence, the best choice is C.

Using the Practical Method,what Is the Accumulated Value of $20,000