Final answer:
Jennifer's total investment return at the end of 3 years, with an $80,000 investment at 7% interest compounded annually, would be closest to option B, $18,000.
Step-by-step explanation:
Jennifer invests $80,000 in an account which pays 7% compounded annually for 3 years. To calculate her total investment return at the end of 3 years, we can use the compound interest formula:
A = P(1 + r/n)^(nt)
Where:
- A is the amount of money accumulated after n years, including interest.
- P is the principal amount (the initial amount of money).
- r is the annual interest rate (in decimal).
- n is the number of times that interest is compounded per year.
- t is the time the money is invested for, in years.
In this case, P = $80,000, r = 0.07 (7% expressed as a decimal), n = 1 (since it's compounded annually), and t = 3 years.
So, we calculate:
A = 80,000(1 + 0.07/1)^(1*3) = 80,000(1 + 0.07)^3 = 80,000(1.225043) ≈ $98,003.44
The total return on the investment will be the amount accumulated minus the initial investment:
Total return = A - P = $98,003.44 - $80,000 = $18,003.44
Therefore, the answer is closest to B. $18,000.