How much does $500 grow to in 4 years at 6% annual interest, rounded to the nearest dollar?

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Multiple Choice

How much does $500 grow to in 4 years at 6% annual interest, rounded to the nearest dollar?

Explanation:
When interest compounds annually, the future value grows by the factor (1 + i)^n. So with PV = 500, i = 0.06, n = 4, compute (1.06)^4 ≈ 1.26247696. Multiply by 500 to get 500 × 1.26247696 ≈ 631.24, which rounds to $631. The standard annual-compounding assumption yields about $631 after four years. If it were simple interest, the result would be 620, but compounding is the typical interpretation here.

When interest compounds annually, the future value grows by the factor (1 + i)^n. So with PV = 500, i = 0.06, n = 4, compute (1.06)^4 ≈ 1.26247696. Multiply by 500 to get 500 × 1.26247696 ≈ 631.24, which rounds to $631. The standard annual-compounding assumption yields about $631 after four years. If it were simple interest, the result would be 620, but compounding is the typical interpretation here.

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