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If you were able to invest $32,000 at a rate of 6.40% for 3 months, how much money would you have...

Question:

If you were able to invest $32,000 at a rate of 6.40% for 3 months, how much money would you have at the end of that period?

Short-Term Investment:

Investment is an asset bought in the hopes of the possibility that it will earn future income or that it will be sold in the future for a higher price. There are Long-Term Investment and Short-Term Investment. Short-Term Investment are investment with 90 days or below and usually presented as part of Current Asset under Cash Equivalents.

Answer and Explanation:

The answer is $32,512.

Given:

Investment Cost = $32,000

Rate = 6.40%

Period = 3 months

Computation:

Annual Interest = Investment Cost x Interest Rate

Annual Interest = $32,000 x 6.40%

Annual Interest = $2,048

3 months interest = Annual Interest x 3/12

3 months interest = $2,048 x 3/12

3 months interest = $512

Total Investment = Investment Cost + 3 months interest

Total Investment = $32,000 + $512

Total Investment = $32,512


Learn more about this topic:

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What Are Current Assets? - Definition, Examples & Calculation

from Praxis Business Education - Content Knowledge (5101): Practice & Study Guide

Chapter 3 / Lesson 8
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