Question

You are interested in investing $15,000, a gift from your grandparents, for the next four years in a mutual fund that will earn an annual return of 8 percent. What will your investment be worth at the end of four years? (Round to the nearest dollar.)

Answer 1

Answer:

20,407. 00

Explanation:

The value of the mutual fund will be the future value of $15,000 at 8% interest rate for four years. For future value, we use compound interest formula which is  FV = PV × (1+r)n

Pv is $15,000

r is 8% which is 0.08%

n is 4

FV = 15,000 x (1 + 0.08 ) 4

Fv = 15,000 x 1.36048896

Fv= 20, 407.3344

Fv = 20,407. 00