Question

You are put in charge of managing your firm’s working capital. Your firm has $100,000 in extra cash on hand and decides to put it in a savings account paying 7% interest compounded annually. How much will you have in your account in 10 years?

Answer 1

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period

A=$100,000*(1.07)^10

=$100,000*1.967151357

=$196,715.14(Approx).