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Assume that you purchase a 6-year, 8% savings certificate for $1,000. If interest is compounded annually, what will be the value of the certificate when it matures?
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Assume that you purchase a 6-year, 8% savings certificate for $1,000. If interest is compounded annually, what will be the value of the certificate when it matures?

User Mancaus
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1 Answer

6 votes

Answer:

$1,586.87

Step-by-step explanation:

Rate (I/Y) = 8.00%

Period (N) = 6

Amount (PV) = 1000

PMT = 80

Annual compounding type

Using the MSExcel function to solve for FV.

Future value = FV(Rate, Nper, Pmt, -Pv, 0)

Future value = FV(8%, 6, 80, 1000, 0)

Future value = $1586.87432294

Future value = $1,586.87

So, the value of the certificate when it matures will be $1,586.87.

User Danish Iqbal
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5.0k points
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