Question

4. Future value: Kate Eden received a graduation present of $2,000 that she is planning on investing in a mutual fund that earns 8.5 percent each year. How much money will she have in three years? 5. Future value: Your bank pays 5 percent annual interest compounded semiannually on your savings account. You don't expect to add to the current balance of -,700 over the next four years. How much money can you expect to have at the end of this period? 6. Future value: Your birthday is next week and instead of other presents, your parents promised to give you $1,000 in cash. Since you have a part-time job and, thus, don't need the cash immediately, you decide to invest the money in a bank CD that pays 5.2 percent, compounded quarterly, for the next two years. How much money can you expect to earn in this period of time?

Answer 1

Future value = Present value X (1+i=n)^nt Future value in 3 years = $2,554.58 2,000 X (1+8.5%)^(3)