Question

Calculating future values for each of the following.

a) Present value = $1,000, Interest rate = 5%, Time = 3 years
b) Present value = $500, Interest rate = 8%, Time = 2 years
c) Present value = $2,000, Interest rate = 4%, Time = 5 years
d) Present value = $800, Interest rate = 6%, Time = 4 years

Answer 1

To calculate the future values, use the formula: Future Value = Present Value x (1 + Interest Rate)^Time. Calculations: a) $1,157.63, b) $583.20, c) $2,418.65, d) $964.77.

Step-by-step explanation:

To calculate the future values, we can use the formula: Future Value = Present Value x (1 + Interest Rate)^Time.

1. a) For present value $1,000, interest rate 5%, and time 3 years:
   Future Value = $1,000 x (1 + 0.05)^3 = $1,157.63.
2. b) For present value $500, interest rate 8%, and time 2 years:
   Future Value = $500 x (1 + 0.08)^2 = $583.20.
3. c) For present value $2,000, interest rate 4%, and time 5 years:
   Future Value = $2,000 x (1 + 0.04)^5 = $2,418.65.
4. d) For present value $800, interest rate 6%, and time 4 years:
   Future Value = $800 x (1 + 0.06)^4 = $964.77.