Question

You deposit $1,600 into an account that pays 3% per year. Your plan is to withdraw this amount at the end of 5 years to use for a down payment on a new car. How much will you be able to withdraw at the end of 5 years? Do not round intermediate calculations. Round your answer to the nearest cent. $

Answer 1

$2,141.16

Step-by-step explanation:

The formula and the computation of the future value is shown below:

Future value = Present value × (1 + rate)^number of years

where,

Present value = $1,600

Rate = 6%

Number of years = 5 years

So, the future value

= $1,600 × (1 + 0.06)^5

= $1,600 × 1.3382255776

= $2,141.16

Hence, the future value is $2,141.16

We simply applied the above formula to determine the future value