a deposit of $420 earns interest rates of 8.2 percent in the first year and 10.2...
a deposit of $420 earns interest rates of 8.2 percent in the first year and 10.2 percent in the second year. What would be second year future value?
Homework Answers
Future value formula
PV= present value=420
I= interest rate = 8.2 for first year
N= number of years
FV= PV (1+I)^n
Fv = 420 (1+0.082)=454.44
Next interest rate=10.2
PV= 454.44
FV=454.44(1+.102)
FV= 500.79
Or
FV= PV(1+i) ×(1+j)
i= first year interest rate
j= second year interest rate
FV= 420(1+.08)×(1+0.102)=500.79
Both method is same but explained in details in first method . Future value calculated using compound interest formula so answer is fv=500.79
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