If you invest $1,000 today at an annual compound rate of 6% for 3 years, what is the approximate future value?

• A. Approximately $1,191.02
• B. Approximately $1,180.00
• C. Approximately $1,150.00
• D. Approximately $1,250.00

Answer: (A)

Compound interest over multiple years grows the initial amount by multiplying it each year by (1 plus the annual rate). Here, you invest 1000 at 6% for 3 years, so the future value is 1000 × (1.06)^3. Calculating (1.06)^3 gives about 1.191016, and multiplying by 1000 yields roughly 1191.02. So the approximate future value is $1,191.02. The other options are not the result of three years of 6% annual compounding, so they don’t match this calculation.