Question

Calculate the future value of $9,000 in a. 4 years at an interest rate of 9% per year. b. 8 years at an interest rate of 9% per year. c. 4 years at an interest rate of 18% per year. d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)? a. Calculate the future value of $9,000 in 4 years at an interest rate of 9% per year. The future value of $9,000 in 4 years at an interest rate of 9% per year is $ . (Round to the nearest dollar.)

Answer 1

	Future Value = Amount * (1+r)^n
	Where,
	r= Interest rate
	n= Number of years
a)	=$9000*(1+0.09)^4
	$       12,704
b)	=$9000*(1+0.09)^8
	=$17933
c)	=$9000*(1+0.18)^4
	=$17449
d)	Because of the compounding effect of 4 years.
	Interest is calculated on interest for the next 4 years.