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?
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.
Investment Cost = $32,000
Rate = 6.40%
Period = 3 months
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
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from Praxis Business Education - Content Knowledge (5101): Practice & Study GuideChapter 3 / Lesson 8