To calculate the value of a $1500 investment at 7% for 20 years, one would use?

• A. A compounding table
• B. A present value formula
• C. A simple interest table
• D. An amortization schedule

Answer: (A)

Future value is found by applying compound interest over time. To know how much a 1500 investment will be worth after 20 years at 7%, you use the future value factor for 7% over 20 years from a compounding table and multiply by the principal. The factor is (1.07)^20, which is about 3.87, so the value is roughly 1500 × 3.87 ≈ 5,800. A compounding table is the right tool because it directly provides how growth accumulates with compounding over a given period and rate. The present value formula, in contrast, tells you what a future amount is worth now, not what today’s investment will be worth later. A simple interest table assumes interest is earned only on the original principal, not on accumulated interest. An amortization schedule is meant for loan payments and the split between interest and principal over time, not for projecting investment growth.