Question

value:a. A savings product requires you to invest the following amounts. 250 today, 450 in one year, 650 in two years, 850 in three years, 1100 in four years. What is the future value (in five years) of these payments, assuming an interest rate of 2.75%

Answer 1

$3,520.65

Step-by-step explanation:

The calculation of the future value is given below:

As we know that

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

= $250 × (1 + 0.0275)^5 + $450 × (1 + 0.0275)^4 + $650 × (1 + 0.0275)^3 + $850 × (1 + 0.0275)^2 + $1,100 × (1 + 0.0275)^1

= $286.32 + $501.58 + $705.11 + $897.39 + $1,130.25

= $3,520.65

We simply applied the above formula to find out the future value