Question

21. Calculate the future value of a $7,000 after 9

years, when there is an interest rate of 2.05%
with quarterly simple interest payments.
[A] $7,322.88
[D] $8,419.30
[B] $8,414.35
[E] $7,527.31
[C] $6,148.05

Answer 1

To calculate the future value of a $7,000 investment with a 2.05% interest rate and quarterly simple interest payments over 9 years, you can use the following formula:

Future value = Principal * (1 + (Interest rate / Number of compounding periods per year)) ^ (Number of years * Number of compounding periods per year)

Plugging in the values given in the question, we get:

Future value = $7,000 * (1 + (0.0205 / 4)) ^ (9 * 4)

This simplifies to:Future value = $7,000 * (1.005125) ^ 36

Using a calculator or spreadsheet to calculate this value, we get:

Future value = $8,414.35

Therefore, the correct answer is [B] $8,414.35.