Question

What's the future value of an investment of $1 a year for each of 4 years, at the end of the last year? Suppose the interest rate is 8%.

Answer 1

4.51

Step-by-step explanation:

We have to calculate fva. The future value of annuity

Here is the formula

Fva = A [( + I)^n-1/I]

Where a = annuity

I = interest rate

N = number of years

Inserting into formula

1[(1+0.08)^4 - 1/0.08]

= 1[(1.36049 - 1)/0.08]

= 4.51

Therefore the future investment is $4.51