Answer:
If investment is made for one year, Future value = $8240
If investment is made for two years, Future value = $8487.2
Step-by-step explanation:
The future value of a cash flow can be calculated using the following formula,
Future value = Present value * (1+i)^t
Where,
- i is the rate of interest
- t is the time period
As the interest rate is compounded annually, the future value after one year will be,
After one year
Future value = 8000 * (1+0.03)^1
Future value = $8240
After two year
Future value = 8000 * (1+0.03)^2
Future value = $8487.2