Compute the future of $1-000 compounded annually for 10 years at 7 percent (D0 n

Question

Compute the future of $1-000 compounded annually for 10 years at 7 percent (D0 not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Compute the future value of $1,000 compounded annually for 10 years at 13 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g.. 32.16.) Compute the future value of $1.000 composed annually for 15 years at 7 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Explanation / Answer

Future value = Present value x (1+i)n

a.

Present Value = PV= $1,000

i=interest rate = 7% or 0.07

n= no of years=10

Future value=$1,000 x (1+0.07)10

                   =$1,000 x 1.0710

                   =$1,000 x 1.967

                                =$ 1,967.15

b.

Present Value = PV= $1,000

i=interest rate = 13% or 0.13

n= no of years=10

Future value=$1,000 x (1+0.13)10

                   =$1,000 x 1.1310

                   =$1,000 x 3.395

                                = $ 3,394.57

C.

Present Value = PV= $1,000

i=interest rate = 7% or 0.07

n= no of years=15

Future value=$1,000 x (1+0.07)15

                   =$1,000 x 1.0715

                                =1.000 x 2.759

                                =$2,579.03

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