Question

Bob deposits the amount of $115 in his bank account today, and plans to deposit the amount of $150 in the same account one year from today, and finally plans to deposit the amount of $225 in the same account two years from now. If the interest rate is 7.65%, how much will Bob have accumulated in his account three years from today

Answer 1

Answer:$559.50

Step-by-step explanation:

Using the formula

PV x (1 + r) ^ n = FV

where PV= Present value

r= rate

n=number of years

FV= Future value

a) Future value to earn in 3 yrs for amount of $115

115 x (1+7.65%) ^3 = $143.463

b) Future value to earn in 2 yrs for amount of $150

150 x (1+7.65%) ^2= $173.8278

c)Future value to earn in 1 year for amount of $225

225 x (1+7.65%) ^1= $242.2125

Total Amount Accumulated in three years = $143.463 + $173.8278+ $242.2125 =$559.5033 = $559.50