If $5,000 Is Invested in an Account with 7% Interest

question 92

Multiple Choice

If $5,000 is invested in an account with 7% interest compounding yearly, what will the balance of the account be after 3 years? Please refer to the following Future Value table:
$$\begin{array} { |r | r | r | r | r | } \hline\begin{array} { l } \text { Future } \\\text { Value of } \\\text { \$1 }\end{array} & & & & \\\hline & 4 \% & 5 \% & 6 \% & 7 \% \\\hline 1 & 1.040 & 1.050 & 1.060 & 1.070 \\\hline 2 & 1.082 & 1.103 & 1.124 & 1.145 \\\hline 3 & 1.125 & 1.158 & 1.191 & 1.225 \\\hline 4 & 1.170 & 1.210 & 1.262 & 1.311 \\\hline 5 & 1.217 & 1.270 & 1.338 & 1.403 \\\hline 6 & 1.265 & 1.340 & 1.419 & 1.50 \\\hline\end{array}$$

• A) $6,180
• B) $6,211
• C) $5,867
• D) $6,125

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Definitions:

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A legal status that gives a creditor priority over others in claiming collateral or property rights, typically involving a secured transaction that has been properly filed or recorded.

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A type of bankruptcy in the U.S. that allows individuals earning regular income to draft a plan to repay all or part of their debts over a period of time.

Chapter 11

A provision of the United States Bankruptcy Code that allows businesses to undergo reorganization while keeping the business alive and paying creditors over time.