Question

Compute the future value in year 9 of a $2,000 deposit in year 1, and another $1,500 deposit at the end of year 3 using a 10 percent interest rate. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Answer 1

Future value is $ 6,944.52.

Calculation:

Year 9 of a $2,000 deposit in year 1

This can be calculated using compounding formula given below.

Year 9 value = present value (1+I%)^period

Year 9 value = 2,000 (1+10%)^8

Year 9 value = $ 4,287.18-A

$1,500 deposit at the end of year 3

This can also be calculated using compounding formula given below.

Year 9 value = present value (1+I%)^period

Year 9 value = 1,500 (1+10%)^6

Year 9 value = $ 2,657.34-B

Combined Value = A+B = $ 6,944.52