Question

Compute the future value in year 8 of a $3,500 deposit in year 1 and another $3,000 deposit at the end of year 3 using a 10 percent interest rate. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Future value =

Answer 1

FV after 8 Years = FV of deposit in Year1 + FV of Depost after 3 years

FV = Deposit * (1+r)ⁿ

FV of deposit in Year1 = $ 3500 (1+0.10)⁷

= $ 3500 (1.10)⁷

= $ 3500 (1.9487)

= $ 6820.51

FV of deposit in Year3 = $ 3000 (1+0.10)⁵

= $ 3000 (1.10)⁵

= $ 3000 (1.6105)

= $ 4831.53

FV after 8 years = FV of depsit 1 + FV of deposit of Yr 3

= $ 6820.51 + $ 4831.53

= $ 11,652.04

Pls comment, if any further assistance is required;

Assumption First deposit made at the end of Year1