Question

Dwayne plans to invest $4,700 in a savings account at the beginning of each of the next 12 years. If his opportunity cost rate is 7 percent compounded annually, how much will his investment be worth at the end of 12 years?

Answer 1

$ 10861.7

Step-by-step explanation:

Amount at the end of 12 yrs should be gotten by compound interest.

A = p(1+ r/n)^nt

= 4700(1 + (0.07/12))^ (12*12)

= 4700(1+(5.833*10^-3))^(144)

A = 4700(1.0058333)^(144)

A = 4700*2.31

A = 10861.7

A=$ 10861.7

Answer 2

his investment will be worth $39,944 at the end of 12 years.

Step-by-step explanation:

FV = PV(1 + i)^n

= $4,700 + $4,700*PVAF(7%,11 years)

= $4,700 + $4,700*7.49867

= $4,700 + $35,244

= $39,944

Therefore, his investment will be worth $39,944 at the end of 12 years.