The future value $5000 invested for 3 years at a rate r compounded annually is g

Reeves

Reeves

Answered question

2021-09-19

The future value $5000 invested for 3 years at a rate r compounded annually is given by S=5000(1+r)3. Complete parts (a) through (d).
a) Complete the table below to determine the future value of $5000 at certain interest rates.
Rate4%5%7.25%10.5%Future Value$?$?$?$?
(Type integers or decimal rounded to the nearest hundredth.)

Answer & Explanation

Arnold Odonnell

Arnold Odonnell

Skilled2021-09-20Added 109 answers

Step 1
Future value is calculate by using this formula:
FV=PV(1+r)n
r is interest rate and n is time period.
Step 2
a) Present value =$5000
Time period =3 year
- Future value at 4% interest rate
FV=PV(1+r)t
FV=5000(1+0.04)3
=$5624.32
- Future value at 5% interest rate
FV=5000(1+0.05)3
=$5788.13
- Future value at 7.25% interest rate
FV=5000(1+0.0725)3
=$6168.25
- Future value at 10% interest rate
FV=5000(1+0.10)3
=$6655

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