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A mutual fund has an annual return of 8%. If you invest $1,000, how much will yo

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Question: A mutual fund has an annual return of 8%. If you invest $1,000, how much will you have after 3 years with compound interest?

Options:

  1. $1,080
  2. $1,259.71
  3. $1,343.92
  4. $1,500

Correct Answer: $1,343.92

Solution: 

Amount = Principal * (1 + Rate)^Time = 1000 * (1 + 0.08)^3 = 1000 * 1.25971 = $1,259.71

A mutual fund has an annual return of 8%. If you invest $1,000, how much will yo

Practice Questions

Q1
A mutual fund has an annual return of 8%. If you invest $1,000, how much will you have after 3 years with compound interest?
  1. $1,080
  2. $1,259.71
  3. $1,343.92
  4. $1,500

Questions & Step-by-Step Solutions

A mutual fund has an annual return of 8%. If you invest $1,000, how much will you have after 3 years with compound interest?
  • Compound Interest – The process of earning interest on both the initial principal and the accumulated interest from previous periods.
  • Exponential Growth – Understanding how investments grow over time when compounded, as opposed to simple interest.
  • Time Value of Money – The principle that money available now is worth more than the same amount in the future due to its potential earning capacity.
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