Question

Which of the following investments will have the highest future value? $1,300 invested at an annual interest rate of 10% for 5 years O $1,000 invested at an annual interest rate of 10% for 10 years O $1,300 invested at an quarterly interest rate of 2.25% for 5 years $1,000 invested at an quarterly interest rate of 2.25% for 10 years

Answer 1

Answer : Option 2) =$1,000 invested at an annual interest rate of 10% for 10 Years

Future Value = Amount *(1+r)^n

1) r=10% n=5

Future Value = $1,300*(1.10)^5 = $2,093.66

2) r=10% n=10

Future Value = $1,000*(1.10)^10 =$2,593.74

3) r=2.25% n= 5*4 =20

Future Value = $ 1,300*(1.0225)^20= $ 2,028

4) r=2.25% n=10*4 = 40

Future Value = $1,000*(1.0225)^40= $2,435.19