Question

Problem 5-19 Present Values (LO2) If the interest rate this year is 7.9% and the interest rate next year will be 9.9%, what is the future value of $1 after 2 years

Answer 1

FV= $1.19

Step-by-step explanation:

Giving the following information:

The interest rate this year is 7.9% and the interest rate next year will be 9.9%

PV= $1

To calculate the future value, we need to use the following formula:

FV= PV*(1+i)^n

FV1= 1*1.079= 1.079

FV2= 1.079*1.099= $1.19