A formula used to compute the current value of an investment account is A = P(1 + r )n, where A is the current value, P is the amount deposited, r is the rate of interest for 1 compounding period, expressed as a decimal, and n is the number of compounding periods.Which of the following is closest to the value of an investment account after 3 years if $8,000 is deposited at 5% annual interest compounded annually?a)$8,400b)$9,261c)$15,730d)$25,200e)$33,463Correct answer is option 'B'. Can you explain this answer?

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A formula used to compute the current value of an investment account is A = P(1 + r )ⁿ, where A is the current value, P is the amount deposited, r is the rate of interest for 1 compounding period, expressed as a decimal, and n is the number of compounding periods.
Which of the following is closest to the value of an investment account after 3 years if $8,000 is deposited at 5% annual interest compounded annually?

a)
$8,400
b)
$9,261
c)
$15,730
d)
$25,200
e)
$33,463

Correct answer is option 'B'. Can you explain this answer?

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Most Upvoted Answer

A formula used to compute the current value of an investment account i...

Given:
- Amount deposited (P) = $8,000
- Rate of interest (r) = 5% = 0.05 (expressed as a decimal)
- Number of compounding periods (n) = 3

To find:
The value of the investment account after 3 years.

Formula:
A = P(1 + r)^n

Calculation:
Substituting the given values into the formula, we have:
A = 8,000(1 + 0.05)^3
A = 8,000(1.05)^3

Step 1: Calculate (1.05)^3
(1.05)(1.05)(1.05) = 1.157625

Step 2: Multiply the result from Step 1 by $8,000
A = 8,000 * 1.157625
A = $9,261

Answer:
The value of the investment account after 3 years, rounded to the nearest dollar, is $9,261. Therefore, the closest option is (B) $9,261.

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A formula used to compute the current value of an investment account i...

To solve this problem, substitute the given values into the formula as follows:
A = 8, 000(1 + 0.05)³
= 8, 000(1.157625)
= 9, 261

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A formula used to compute the current value of an investment account is A = P(1 + r )n, where A is the current value, P is the amount deposited, r is the rate of interest for 1 compounding period, expressed as a decimal, and n is the number of compounding periods.Which of the following is closest to the value of an investment account after 3 years if $8,000 is deposited at 5% annual interest compounded annually?a)$8,400b)$9,261c)$15,730d)$25,200e)$33,463Correct answer is option 'B'. Can you explain this answer?

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A formula used to compute the current value of an investment account is A = P(1 + r )n, where A is the current value, P is the amount deposited, r is the rate of interest for 1 compounding period, expressed as a decimal, and n is the number of compounding periods.Which of the following is closest to the value of an investment account after 3 years if $8,000 is deposited at 5% annual interest compounded annually?a)$8,400b)$9,261c)$15,730d)$25,200e)$33,463Correct answer is option 'B'. Can you explain this answer? for ACT 2025 is part of ACT preparation. The Question and answers have been prepared according to the ACT exam syllabus. Information about A formula used to compute the current value of an investment account is A = P(1 + r )n, where A is the current value, P is the amount deposited, r is the rate of interest for 1 compounding period, expressed as a decimal, and n is the number of compounding periods.Which of the following is closest to the value of an investment account after 3 years if $8,000 is deposited at 5% annual interest compounded annually?a)$8,400b)$9,261c)$15,730d)$25,200e)$33,463Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for ACT 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A formula used to compute the current value of an investment account is A = P(1 + r )n, where A is the current value, P is the amount deposited, r is the rate of interest for 1 compounding period, expressed as a decimal, and n is the number of compounding periods.Which of the following is closest to the value of an investment account after 3 years if $8,000 is deposited at 5% annual interest compounded annually?a)$8,400b)$9,261c)$15,730d)$25,200e)$33,463Correct answer is option 'B'. Can you explain this answer?.

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