Asked by Alexandra Ibanez on Apr 24, 2024
Verified
If the interest rate is 11 percent, what is the future value of $6,000 three years from now?
A) $8,206
B) $7,980
C) $7,500
D) $8,460
Interest Rate
It represents the cost of borrowing money or the reward for saving, crucial for personal finance and economic policy decisions.
Years
Units of time that represent a period approximately equal to 365 days, used to measure duration or age.
- Describe how interest rates, inflation, and genuine investment returns are interconnected.
Verified Answer
DG
Danika Gordon6 days ago
Final Answer :
A
Explanation :
The future value (FV) of an investment is calculated using the formula FV = PV(1 + r)^n, where PV is the present value, r is the interest rate per period, and n is the number of periods. Plugging in the values: FV = $6,000(1 + 0.11)^3 = $6,000(1.11)^3 = $8,206.
Learning Objectives
- Describe how interest rates, inflation, and genuine investment returns are interconnected.