The future value of an investment of $5,000 earning an interest rate of 10 percent compounded annually equals $6,000 at the end of one year.

Question

Quizplus · Accepted Answer

The future value of an investment is calculated using the formula FV = PV(1 + r)^n, where PV is the present value, r is the annual interest rate, and n is the number of years. For a $5,000 investment at 10% interest compounded annually for one year, the future value would be $5,000 * (1 + 0.10)^1 = $5,500, not $6,000.

The Future Value of an Investment of $5,000 Earning an Interest