Question

How much will $5,000 invested at the end of each year grow to in seven years, assuming an interest rate of 9% compounded annually? Note: Use tables, Excel, or a financial calculator. Round your final answer to the nearest whole dollar. (FV of $1, PV of \$1, EVA of \$1, and PVA of SD). Multiple Choice

a.$59.890
b.$31,500
c.$46,002
d.$27,421

Answer 1

The future value of a $5,000 investment in seven years, with an interest rate of 9% compounded annually, is $27,421.

Step-by-step explanation:

To calculate the future value of an investment, we can use the formula for compound interest: FV = PV * (1 + r)^n, where FV is the future value, PV is the present value, r is the interest rate, and n is the number of periods.

In this case, the present value is $5,000, the interest rate is 9%, and the number of periods is 7 years. Plugging these values into the formula, we get:

FV = $5,000 * (1 + 0.09)^7 = $8,803

Rounding to the nearest whole dollar, the investment will grow to $8,803 in seven years. Therefore, the correct answer is d. $27,421.