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Which of the following comes closest to the value at the end of year 6 of investing $600 today (year 0) and then investing another $600 at the end of year 5 if the interest rate is 3%? a. $ 1,434 b. $
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Which of the following comes closest to the value at the end of year 6 of investing $600 today (year 0) and then investing another $600 at the end of year 5 if the interest rate is 3%?

a. $ 1,434
b. $ 1,334
c. $ 1,542
d. $ 1,383
e. $ 1,487

User Xlander
by
3.4k points

1 Answer

5 votes

Answer:

The correct answer is B.

Step-by-step explanation:

Giving the following information:

Investment= $600 today and $600 at the end of year 5

Interest rate= 3%

To calculate the final value, we need to apply the following formula on each investment:

FV= PV*(1+i)^n

FV= 600*(1.03^6)= $716.43

FV= 600*(1.03^1)= $618

Total FV= $1,334.43

User OhadBasan
by
3.4k points
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