Future Worth of a Single Deposit
Easyfuture worthcompound interest
A city deposits $50,000 today in a reserve fund earning 5% per year compounded annually. The balance after 8 years is most nearly:
- A$70,000
- B$33,842
- C$81,445
- D$73,873
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Answer: D. $73,873
Equation: F = P(1 + i)n. Values: P = $50,000 deposited now, i = 5% per year, n = 8 years. Step 1: 1.058 = 1.4775. Step 2: F = 50,000 × 1.4775 = $73,873. $70,000 is simple interest (50,000 × 1.40). $81,445 swaps i and n (8% for 5 years). $33,842 divides by 1.4775 instead of multiplying.
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