The future value of these deposits are $1,591.80.
Annual Deposit Amount = $500
Rate of Interest = 6% p.a. interest compounded annually
Time (n) = 3 Years
It is a Common Annuity Series since the yearly store sum is the same and it is for a predetermined period.
The Future Worth of these stores = Yearly Store Sum x FVIFA(6%, 3) - - - - - - - - - - - - - - - Condition
The Worth of FVIFA(6%, 3) can be estimation by utilizing following equation:
FVIFA(6%, 3) = [(1+R)3 - 1]/R = [(1+0.06)3 - 1]/0.06 = 3.1836
By placing this worth in the above condition, we get
The Future Value of these deposits = $500 x 3.1836 = $1,591.80
The future value is important to investors and financial planners, as they use it to estimate how much an investment made today will be worth in the future.