Question

Suppose you could make a single "lump sum" deposit of $8006, in an investment that provides an APR of 3% compounded daily. Determine the Future Value (FV) of the investment after 8 years.

A) $9,156.80
B) $9,486.34
C) $9,627.50
D) $9,972.15

Answer 1

The future value (FV) of the investment after 8 years is approximately $9,156.80.

Step-by-step explanation:

To determine the future value (FV) of an investment after 8 years with an APR of 3% compounded daily, we can use the formula: FV = P(1 + r/n)^(nt), where:

• FV is the future value
• P is the principal amount
• r is the annual interest rate (as a decimal)
• n is the number of times that interest is compounded per year
• t is the number of years

Plugging in the values:

• P = $8006
• r = 3/100 = 0.03
• n = 365 (since interest is compounded daily)
• t = 8

We get:

FV = $8006(1 + 0.03/365)^(365 * 8)

FV ≈ $9,156.80