If Ming Lee invests $13,000 at a rate of 5% for 7 years, what will be the future value of his investment?

If Ming Lee invests $13,000 at a rate of 5% for 7 years, what will be the future value of his investment?

• A. $17,564
• B. $18,104
• C. $18,292
• D. $19,324

Answer: (C)

To determine the future value of Ming Lee's investment, we can apply the future value formula for compound interest. The formula is: \[ FV = P(1 + r)^n \] Where: - \( FV \) is the future value of the investment, - \( P \) is the principal amount (the initial amount of money), - \( r \) is the annual interest rate (expressed as a decimal), - \( n \) is the number of years the money is invested for. Given: - \( P = 13,000 \) - \( r = 0.05 \) (which is 5% expressed as a decimal) - \( n = 7 \) Substituting these values into the formula: \[ FV = 13,000(1 + 0.05)^7 \] Calculating inside the parentheses first: \[ FV = 13,000(1.05)^7 \] Next, we calculate \( (1.05)^7 \): \[ (1.05)^7 \approx 1.4071 \] Now, we can finish the calculation: \[ FV = 13,000 \times 1.4071 \] \[ FV \approx

To determine the future value of Ming Lee's investment, we can apply the future value formula for compound interest. The formula is:

[ FV = P(1 + r)^n ]

Where:

• ( FV ) is the future value of the investment,

• ( P ) is the principal amount (the initial amount of money),

• ( r ) is the annual interest rate (expressed as a decimal),

• ( n ) is the number of years the money is invested for.

Given:

• ( P = 13,000 )

• ( r = 0.05 ) (which is 5% expressed as a decimal)

• ( n = 7 )

Substituting these values into the formula:

[ FV = 13,000(1 + 0.05)^7 ]

Calculating inside the parentheses first:

[ FV = 13,000(1.05)^7 ]

Next, we calculate ( (1.05)^7 ):

[ (1.05)^7 \approx 1.4071 ]

Now, we can finish the calculation:

[ FV = 13,000 \times 1.4071 ]

[ FV \approx