Multiple choice

An investment of $1,000 was made at an interest rate of 6% per year, compounded annually. What will be the value of the investment after 3 years?

  1. $1,191
  2. $1,180
  3. $1,196
  4. $1,212
  5. $1,215
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A Correct answer
Explanation

Compound interest formula: A = P(1 + r/n)^(nt). A = 1000(1 + 0.06)^3 = 1000(1.06)^3 = 1000 * 1.191016 = 1191.016.

AI explanation

Using the compound interest formula Amount = Principal x (1 + Rate/100)^Time, we get Amount = 1000 x (1 + 6/100)^3. This evaluates to 1000 x (1.06)^3, which is 1000 x 1.191016. The final value of the investment is approximately 1191.

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