Compute the future value of $100 at an 5 percent interest rate 5, 10, and 15 yea

Question

Compute the future value of $100 at an 5 percent interest rate 5, 10, and 15 years into the future. What would the future value be over these time horizons if the interest rate were 3 percent?

Instruction: Round your answers to the nearest penny (2 decimal places).

Future value in 5 years at 5 percent = $

Future value in 10 years at 5 percent = $

Future value in 15 years at 5 percent = $

Future value in 5 years at 3 percent = $

Future value in 10 years at 3 percent = $

Future value in 15 years at 3 percent = $

Explanation / Answer

Given interest rate=5% per annum.

Principle amount =$100.

Future amount for 5 years is obtained by using the compound interest formula A=P(1+r/100)^n

where A=Maturity amount.

P=Principal amount=$100

r= rate of interest=0.05

n= number of compounding periods.=5

Subtituting the values in the formula =100*(1+.05)^5

=127.63

If the deposit is there for 10 years, future value would be=100*(1.05)^10

=$162.89

If the deposit is there for 15 years, then future value is =100*(1.05)^15

=$207.89.

If the interest rate is 3%:

If the deposit is there for 5 years, future value would be=100*(1.03)^5

=$115.93

f the deposit is there for 10 years, future value would be=100*(1.03)^10

=$134.39

If the deposit is there for 15 years, then future value is =100*(1.03)^15

=$155.80

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