Question

6 Given a 3 percent interest rate, compute the year 6 future value of deposits made in years 1, 2, 3, and 4 of $1700, 1900, 51.900, and $2,200, respectively. (Do not round intermediate calculations and round your final answer to 2 decimal places.) 10 points eBook Hint Print References

Answer 1

future value factor = (1+r)^n

here,

r = 3%=>0.03.

n= 6 years - number of the year of deposit...(i.e 5 years for deposit made in year 1, 4 years for deposit made in year2, 3 years for deposit made in year 3).

year	Future value factor	cash flow	future value factor *cash flow
1	(1.03)^5=>1.15927407	1700	(1700*1.15927407)=>1,970.76592
2	(1.03)^4=>1.12550881	1900	(1900*1.12550881)=>2,138.46674
3	(1.03)^3=>1.092727	1900	(1900*1.092727)=>2,076.1813
4	(1.03)^2=>1.0609	2200	(2200*1.0609)=>2,333.98
			$8,519.39