Question

Suppose that you invest $100 today in a risk-free investment with an annual compounding interest rate of 4%. What will be the value of your investment in 4 years?

Answer 1

Answer:

Value of investment = $117

Explanation:

Given:

P = $100

r= 4% = 0.04

n = 4 years

Computation:

A = P(1+r)ⁿ

A = 100(1+0.04)⁴

A = 100(1.04)⁴

A = 116.9858

A = $117

Value of investment = $117