This afternoon you deposited $5,000 in a retirement investment that is guarantee

Question

This afternoon you deposited $5,000 in a retirement investment that is guaranteed to compound interest at 6 percent annually for 40 years. You will not withdraw any principal or interest until you retire at the end of the 40-year period. Which one of the following statements is correct?

The interest amount you earn six years from now will equal the interest amount you earn ten years from now.

The interest amount you earn will double every year.

The total amount of interest you will earn will equal $5,000 x .06 x 40.

The present value of this investment is equal to $5,000.

The future value of this investment is equal to $5,000 x (1+40) .06

The interest amount you earn six years from now will equal the interest amount you earn ten years from now.

The interest amount you earn will double every year.

The total amount of interest you will earn will equal $5,000 x .06 x 40.

The present value of this investment is equal to $5,000.

The future value of this investment is equal to $5,000 x (1+40) .06

Explanation / Answer

Answer : Answer ' 4' is correct. The present value of this investment is equal to $5,000.

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