Question

Periods Future Value of 1 at 8%

1 1.080
2 1.166
3 1.260
4 1.360
5 1.469
If $15,000 is deposited in a savings account today, what amount will be available three years from today?
a. $15,000 ÷ 1.260
b. $15,000 × 1.260
c. $15,000 × 1.080 × 3
d.($15,000 × 1.080) + ($15,000 × 1.166) + ($15,000 × 1.260)

Answer 1

To calculate the amount that will be available three years from today, use the future value formula. The correct answer is $15,000 x 1.080 x 3, that is option C.

Step-by-step explanation:

To calculate the amount that will be available three years from today, you need to use the future value formula. The formula is:

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

In this case, the Present Value is $15,000 and the Interest Rate is 8% (0.08). So the calculation is:

Future Value = $15,000 x (1 + 0.08)^3

Simplifying this calculation gives a Future Value of approximately $18,556.80. Therefore, option (c) is the correct answer: $15,000 x 1.080 x 3.