Your grandmother places $13,000 into an account earning an interest rate of 7% per year. After 5 years the account will be valued at $18,233.17. Which of the following statements is correct?
A) The present value is $13,000, the time period is 7 years, the present value is $18,233.17, and the interest rate is 5%.
B) The future value is $13,000, the time period is 5 years, the principal is $18,233.17, and the interest rate is 7%.
C) The principal is $13,000, the time period is 5 years, the future value is $18,233.17, and the interest rate is 7%.
D) The principal is $13,000, the time period is 7 years, the future value is $18,233.17, and the interest rate is 5%.
Answer: C
Explanation: C) The $13,000 is the principal or present value, the interest rate is stated as 7%, the time period is identified as 5 years, and the future value is $18,233.17.
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