Chartered Retirement Planning Counselor (CRPC) Practice Exam 2025 - Free CRPC Practice Questions and Study Guide

Question: 1 / 660

What will be the value of an account after investing $4,000 at 7% for four years?

$4,500

$5,243

To determine the value of an account after investing $4,000 at an annual interest rate of 7% for four years, it's essential to use the formula for compound interest, which is:

\[ A = P(1 + r)^n \]

Where:

- \( A \) is the amount of money accumulated after n years, including interest.

- \( P \) is the principal amount (the initial money).

- \( r \) is the annual interest rate (decimal).

- \( n \) is the number of years the money is invested or borrowed.

In this scenario:

- \( P = 4,000 \)

- \( r = 0.07 \) (which is 7% expressed as a decimal)

- \( n = 4 \)

Plugging these values into the formula:

\[ A = 4000(1 + 0.07)^4 \]

\[ A = 4000(1.07)^4 \]

\[ A = 4000(1.3107961) \] (approximately)

Calculating this gives:

\[ A \approx 4000 \times 1.3107961 \]

\[ A \approx 5243.18 \]

Thus,

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$6,000

$5,000

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