Question

Korey is planning to open a comic book store. In his first year of operation, Korey expects to average $1,000 of profit each month. He then expects profits to increase by 6% each year for the next 4 years. How much does Korey expect to make in profits in his fifth year of operation? A = P (1 + r) superscript t
a.
$15,149.72
b.
$16,058.71
c.
$31,120.46
d.
$32,987.69

Answer 1

First-year profit = $1,000 × 12 = $12,000.

Fifth-year profit = 12,000 × (1.06)^4
= 12,000 × 1.26247696 ≈ $15,149.72.

Answer: (a) $15,149.72.