If an investment of 60,000 earns 12% compounded quarterly for five years, the amount at maturity is closest to?

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Multiple Choice

If an investment of 60,000 earns 12% compounded quarterly for five years, the amount at maturity is closest to?

Explanation:
Understanding how compound interest grows an investment over time. With a 12% annual rate compounded quarterly, each quarter earns 0.12/4 = 3%. Over five years there are 5 × 4 = 20 quarters. So the future value is A = 60,000 × (1 + 0.03)^{20} = 60,000 × (1.03)^{20}. Calculating (1.03)^{20} ≈ 1.8061 gives A ≈ 60,000 × 1.8061 ≈ 108,366. Therefore, the amount at maturity is about 108,366.

Understanding how compound interest grows an investment over time. With a 12% annual rate compounded quarterly, each quarter earns 0.12/4 = 3%. Over five years there are 5 × 4 = 20 quarters. So the future value is A = 60,000 × (1 + 0.03)^{20} = 60,000 × (1.03)^{20}. Calculating (1.03)^{20} ≈ 1.8061 gives A ≈ 60,000 × 1.8061 ≈ 108,366. Therefore, the amount at maturity is about 108,366.

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