1. Suppose an investor deposits $2500 in an interest-bearing account at her local bank. The account...
1. Suppose an investor deposits $2500 in an interest-bearing
account at her local bank. The account pays 2.5% interest
compounded annually. If the investor plans on withdrawing the
original principal plus accumulated interested at the end of 7
years, what is the total amount that she should expect to receive
assuming interest rates do not change?
Please show steps on how to calculate answer with a financial
calculator.
Homework Answers
Present Deposit = $2,500
Time Period = 7 years
Interest Rate = 2.5%
Calculating Future Value at the end of Year 7,
Using TVM Calculation,
FV = [PV = 2,500, PMT = 0, N = 7, I = 0.025]
FV = $2,971.71
Value at the end of Year 7 = $2,971.71
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