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Future Value of an Investment Using the future value tables, solve the following

ID: 2416102 • Letter: F

Question

Future Value of an Investment

Using the future value tables, solve the following.

(Click here to access the time value of money tables to use with this problem.)

Round your answers to two decimal places.

Required:

What is the future value on December 31, 2020, of a deposit of $35,000 made on January 1, 2017, assuming interest of 10% compounded annually?

$

What is the future value on December 31, 2020, of a deposit of $10,000 made on January 1, 2017, assuming interest of 16% compounded quarterly?

$

What is the future value on December 31, 2020, of a deposit of $25,000 made on January 1, 2017, assuming interest of 12% compounded semiannually?

$

Explanation / Answer

The future value = Amount * (1+Interest) n

1(a) the future value on December 31, 2020 (compounded Annually) = $35,000*(1+0.10)4

                                                                                                                                       = $35,000*(1.10)4

                                                                                                                                                                         = $35,000*1.4641

                                                                                                             = $51,243.50

1(b) the future value on December 31, 2020 (compounded quarterly) = $10,000*[1+(0.16/4)]4*4

                                                                                                                                       = $10,000*(1.04)16

                                                                                                                                                                         = $10,000*1.8729

                                                                                                             = $18,729.81

1(c) the future value on December 31, 2020 (compounded semi-annually) = $25,000*[1+(0.12/2)]4*2

                                                                                                                                                 = $25,000*(1.06)8

                                                                                                                                                                                      = $25,000*1.5938

                                                                                                                      = $39,846.20