A biotech company has a growth rate of 15% per year. If the initial investment i

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Question: A biotech company has a growth rate of 15% per year. If the initial investment is $10,000, what will be the value after 3 years?

Options:

Correct Answer: $13,500

Solution:

Future Value = 10000 * (1 + 0.15)^3 = 10000 * 1.520875 = $15,208.75.

A biotech company has a growth rate of 15% per year. If the initial investment is $10,000, what will be the value after 3 years?

A biotech company has a growth rate of 15% per year. If the initial investment is $10,000, what will be the value after 3 years?

Step 1: Identify the initial investment amount, which is $10,000.
Step 2: Identify the growth rate, which is 15% per year. Convert this percentage to a decimal by dividing by 100, so 15% becomes 0.15.
Step 3: Determine the number of years for the investment, which is 3 years.
Step 4: Use the formula for future value: Future Value = Initial Investment * (1 + Growth Rate) ^ Number of Years.
Step 5: Plug in the values: Future Value = 10000 * (1 + 0.15) ^ 3.
Step 6: Calculate (1 + 0.15), which equals 1.15.
Step 7: Raise 1.15 to the power of 3: 1.15 ^ 3 = 1.520875.
Step 8: Multiply the initial investment by this result: 10000 * 1.520875 = 15208.75.
Step 9: The future value after 3 years is $15,208.75.

Future Value Calculation – This question tests the ability to calculate the future value of an investment using the formula for compound interest.