Question

Anna will receive $15,000 from a bank deposit in 2 years which has an interest rate of 3.5%. The amount of $15,000 represents the:

A) present value of an annuity
B) future value of an annuity
C) present value
D) future value

Answer 1

The amount of $15,000 represents the future value of an annuity.

Step-by-step explanation:

The amount of $15,000 represents the future value of an annuity. To calculate the future value of an annuity, we use the formula:

Future Value = Present Value × (1 + Interest Rate)Number of Years

For this question, Anna will receive $15,000 in 2 years with an interest rate of 3.5%. Plugging in the values, we get:

Future Value = $15,000 × (1 + 0.035)2

Calculating this gives us a future value of approximately $15,787.63.