Question

Complete the following using the future value formula or financial calculator. (Do not round intermediate calculations. Round your final answers to the nearest cent.) Amount Interest Time 12 years Principal $ 16,700 Rate Compounded 1.5% Annually

Answer 1

Future value formula is given by:

FV = PV * (1 + r%)ⁿ

where, FV = Future value, PV = Present value or principal = $16700, r = rate of interest = 1.5%, n= time period = 12

now, putting theses values in the above equation, we get,

FV = $16700 * (1 + 1.5%)¹²

FV = $16700 * (1 + 0.015)¹²

FV = $16700 * (1.015)¹²

FV = $16700 * 1.19561817146

FV = $19966.82

So, amount is $19966.82

Interest = Amount - Principal

Interest = $19966.82 - $16700 = $3266.82