Question

Calculate the future value of equal investments of $2,000 made at the end of each year for the next 10 years if the interest rate is 10% compounded annually. FIPIF in

Answer 1

The Future Value is $31,874.85 at the end of 10 years .

Future Value Formula =

FV = Pmt x ((1 + i)^ (n - 1) / i

Pmt is the Amount of payment ($2000)

i is the rate of interest (10%) and

n is the number of periods (10 years)

We may also use the below formula for the problem since the Pmt amount is same ($2000) for all the periods (10 years)

FV = Pmt x Future value annuity factor

Future value annuity factor for 10% 10 years is 15.9374.

FV = $2000 x 15.9374 = $31,875