Question

The formula to calculate the future value of investment account FV=PV

(1+i)n, where FV is the future value, PV is the Present Value, i is the number of compounds periods. Calculate the future value of a retirement account, if PV = $50,000, i = 10%, and n is 4. ( Hint: change your interest rate to its decimal value before calculating what it ).

Answer 1

Answer: The formula to calculate the future value of an investment account is FV = PV(1+i)^n, where FV is the future value, PV is the present value, i is the interest rate (in decimal form), and n is the number of compound periods.

Given that PV = $50,000, i = 10%, and n = 4, we can plug these values into the formula:

FV = $50,000(1+0.1)^4

By using the formula, FV = $50,000(1.1)^4 = $50,000(1.4641) = $73,205.50

The future value of the retirement account after 4 years is $73,205.50

Explanation: