Which of the following is the correct way to compute the future value of $100 put into an account that earns 4 percent interest for 10 years?
A) $1001 + .0410)
B) $1001 + .04 10)
C) $100 × 10 1 + .04)
D) $1001 + .04)10

Question

Which of the following is the correct way to compute the future value of $100 put into an account that earns 4 percent interest for 10 years?
A) $1001 + .0410) 
B) $1001 + .04 10) 
C) $100 × 10 1 + .04) 
D) $1001 + .04)10

Quizplus · Accepted Answer

The correct formula to compute future value with annual compounding is PV(1+r)^n, where PV is the present value, r is the annual interest rate as a decimal, and n is the number of years. Plugging in the given values, we get: 100(1+0.04)^10 = $148.02. Therefore, the best choice is D, which calculates the future value using this formula. The other choices either have incorrect calculations or incorrect formulas.

Which of the Following Is the Correct Way to Compute