Question

a. Compute the future value of $2,000 compounded annually for 10 years at 4 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Future value $ =

b. Compute the future value of $2,000 compounded annually for 10 years at 10 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Future value $ =

c. Compute the future value of $2,000 compounded annually for 15 years at 4 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Future value $ =

Answer 1

(a)-Future value of $2,000 compounded annually for 10 years at 4 percent

Future Value = Present Value x (1 + Interest Rate)ⁿ

= Present Value x (1 + r)ⁿ

= $2,000 x (1 + 0.04)¹⁰

= $2,000 x 1.480244

= $2,960.49

(b)-Future value of $2,000 compounded annually for 10 years at 10 percent.

Future Value = Present Value x (1 + Interest Rate)ⁿ

= Present Value x (1 + r)ⁿ

= $2,000 x (1 + 0.10)¹⁰

= $2,000 x 2.593742

= $5,187.48

(c)-Future value of $2,000 compounded annually for 15 years at 4 percent.

Future Value = Present Value x (1 + Interest Rate)ⁿ

= Present Value x (1 + r)ⁿ

= $2,000 x (1 + 0.04)¹⁵

= $2,000 x 1.800944

= $3,601.89