Question

(Related to Checkpoint 5.2) (Future value) If you deposit $2,700 today into an account earning an annual rate of return of 9 percent, what would your account be worth in 25 years (assuming no further deposits)? In 30 years? a. If you deposit $2,700 today into an account earning an annual rate of return of 9 percent, what would your account be worth in 25 years? (Round to the nearest cent.)

Answer 1

Answer a.

Amount Deposited = $2,700
Interest Rate = 9%
Time Period = 25 years

Future Value = Amount Deposited * (1 + Interest Rate)^Time Period
Future Value = $2,700 * 1.09^25
Future Value = $2,700 * 8.623081
Future Value = $23,282.32

Answer b.

Amount Deposited = $2,700
Interest Rate = 9%
Time Period = 30 years

Future Value = Amount Deposited * (1 + Interest Rate)^Time Period
Future Value = $2,700 * 1.09^30
Future Value = $2,700 * 13.267678
Future Value = $35,822.73