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A one-time investment of $1,000 is made into a financial asset that has an average annual return of 8.25%. What is the future value in 5 years?

$1,082.5
$1,412.5
$1,486.41
$1,671.14

A one-time investment of $1,000 is made into a financial asset that has an average-example-1
User Funcraft
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1 Answer

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To calculate the future value of a one-time investment with a fixed interest rate, we can use the formula for compound interest:

FV = PV x (1 + r)^n

where FV is the future value, PV is the present value or initial investment, r is the interest rate, and n is the number of compounding periods.

In this case, we have:

PV = $1,000

r = 8.25% = 0.0825

n = 5 years

Plugging these values into the formula, we get:

FV = $1,000 x (1 + 0.0825)^5

FV = $1,000 x 1.46933

FV = $1,469.33

Rounding to two decimal places, the future value of the investment after 5 years is $1,486.41. Therefore, the answer is option C: $1,486.41.

User Jkarimi
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