Question

A deposit of $870 earns interest rates of 10.7 percent in the first year and 8.7 percent in the second year. What would be the second year future value?

Answer 1

Year2= $1,046.88

Step-by-step explanation:

Giving the following information:

A deposit of $870 earns interest rates of 10.7 percent in the first year and 8.7 percent in the second year.

We need to use the following formula:

FV= PV*(1+i)^n

Year1= 870*1.107= 963.09

Year2= 963.09*1.087= 1,046.88