Question

Future Value (LG5-1) Compute the future value in year 8 of a $4,400 deposit in year 1, and another $3,900 deposit at the end of year 3 using an 10 percent interest rate. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Future value =_______

Answer 1

Total future value = $15,712.78

Step-by-step explanation:

Future value is computed using the formula below:

FV = PV × (1+r)^n

FV- Future value, n -number of years, interest rate per annum

First deposit

FV = 4,400× (1.1)^8 = 9,431.79

Second deposit

Note the deposit was made in year 3, by the end of year year 8, then the number of years would be = (8-3) = 5 years

FV = 3,900 × (1.1)^5 = 6,280.98

Total future value = 9,431.79+ 6,280.98= $15,712.779

Total future value = $15,712.78