Question

You want to deposit $15,000 in a bank at an interest rate of 7 percent per year. What is the future value of this money after three years? A)$18,375.65 B)$19,661.94 C)$20,407.33

Answer 1

The answer you are looking for is A

Answer 2

we know that

The compound interest formula is equal to

`A=P(1+(r)/(n))^(nt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest in decimal

t is Number of Time Periods

n is the number of times interest is compounded per year

in this problem we have

`t=3\ years\\ P=\$15,000\\ r=0.07\\n=1`

substitute in the formula above

`A=15,000*(1+(0.07)/(1))^(3)=\$18,375.65`

therefore

the answer is

`\$18,375.65`