Question

You are scheduled to receive $38,000 in two years. When you receive it, you will invest...

You are scheduled to receive $38,000 in two years. When you receive it, you will invest it for 6 more years at 4.5 percent per year. How much will you have in 8 years?

Multiple Choice

  • $41,477.54

  • $54,039.82

  • $47,011.59

  • $49,485.88

  • $51,960.18

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Homework Answers

Answer #1

The future value of an investment made is given as under:

Future value = Present value*(1+annual interest rate)^number of years

As per the question, $38,000 is invested for 6 years at 4.5% interest rate.

Thus, the future value at the end of year 8 = 38000*(1+0.045)^6 = $49,485.8846

Thus, the fourth option is correct. $49,485.88 is the amount one will have in 8 years.

Comment inc ase of any query related to this problem. Thumbs up would be appreciated. Thanks

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