$15,000 at 15% compounded annually for 5 years
A. $28,500.00
B. $30,170.36
C. $17.250.00
D. $26,250.45
Answer: B. $30,170.36
To calculate the future value of an investment with compound interest, we use the formula:
FV=(1+r/n)^(n ×t) × PV
Where:
PV is the preliminary investment amount ($15 000).
r is the nominal rate of interest (bi-annual or semi-annual rate of 15% or 0.15).
k is the rate at which the interest is compounded per year (1 is for annual rate).
I would say it is the moment after the 5 years period has passed.
Substituting the values, we get:
VF = $15,000 × (1+ 0.15/1)^5.
FV = 15000 x (1.15)^5.
FV = $15,000 x 1.5011875.
FV = $30,170.36
As a result, the ultimate value of the capital of 15 000 invested at 15% compounded per year for 5 years is 30 170.36 dollars.