Question

Compute the future value of $2,000 compounded annually for: a. 20 years at 4 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. 15 years at 10 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. 25 years at 4 percent. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

To compute the future value of $2,000 compounded annually, use the formula FV = PV * (1 + r)^n. For a. 20 years at 4 percent, the future value is $3,646. For b. 15 years at 10 percent, the future value is $8,354. For c. 25 years at 4 percent, the future value is $5,306.

Step-by-step explanation:

To compute the future value of $2,000 compounded annually, we can use the formula: FV = PV * (1 + r)^n, where FV is the future value, PV is the present value, r is the interest rate, and n is the number of years.

1. For part a, the future value can be calculated as follows: FV = $2,000 * (1 + 0.04)^20 = $2,000 * 1.823 = $3,646.
2. For part b, the future value can be calculated as follows: FV = $2,000 * (1 + 0.10)^15 = $2,000 * 4.177 = $8,354.
3. For part c, the future value can be calculated as follows: FV = $2,000 * (1 + 0.04)^25 = $2,000 * 2.653 = $5,306.