What is the future value (to the nearest whole pound) of £500 saved each month for 1 year if the current rate of interest is 4% paid annually?​£6,240£9,222 £7,232 £3,123£6,111

The future value of an investment can be calculated using the formula for the future value of a series of payments (or annuities). The formula is:

FV = P * [(1 + r/n)^(nt) - 1] / (r/n)

Where: FV = Future Value P = Payment amount per period r = Interest rate n = Number of compounding periods per year t = Time the money is invested for in years

In this case: P = £500 (monthly investment) r = 4% or 0.04 (annual interest rate) n = 1 (compounded annually) t = 1 year

Substituting these values into the formula, we get:

FV = £500 * [(1 + 0.04/1)^(1*1) - 1] / (0.04/1)

Solving this equation will give us the future value of the investment.

Let's calculate it:

FV = £500 * [(1 + 0.04)^(1) - 1] / 0.04 FV = £500 * [(1.04)^(1) - 1] / 0.04 FV = £500 * [1.04 - 1] / 0.04 FV = £500 * [0.04] / 0.04 FV = £500 * 1 FV = £500

However, this is the future value of a single payment of £500 after one year. Since we are making 12 payments of £500 each, we need to multiply this value by 12:

FV = £500 * 12 FV = £6,000

So, the future value of £500 saved each month for 1 year at an interest rate of 4% compounded annually is £6,000.

However, this calculation assumes that the interest is only applied at the end of the year, not each month. If the interest is applied each month, the calculation would be more complex and the future value would be slightly higher.

Please note that the options provided in the question do not include £6,000, so there may be a mistake in the question or in the provided options.