Use the following timeline to answer the question(s)below.
-At an annual interest rate of 7%,the future value of this timeline in year 3 is closest to:
A)$3295.
B)$3600.
C)$3771.
D)$4035.

Question

Use the following timeline to answer the question(s)below. 
-At an annual interest rate of 7%,the future value of this timeline in year 3 is closest to:
A)$3295. 
B)$3600. 
C)$3771. 
D)$4035.

Quizplus · Accepted Answer

Using the formula for future value of a sum of money, FV = PV x (1+r)^n, where PV is the present value, r is the interest rate, and n is the number of periods, we can calculate the future value of this timeline in year 3:

FV = 1000(1+0.07)^3 + 1500(1+0.07)^2 + 2000(1+0.07)^1 + 2500 
FV = 1215 + 1732.25 + 2140 + 2500 
FV = 7587.25

Therefore, the closest option to the future value of this timeline in year 3 is C) $3771.

Use the Following Timeline to Answer the Question(s)below