Given a 7% interest rate, compute the year 8 future value of deposits made in years 1, 2, 3, and 4 of $750, $1,200, $500, and $250.
A) $3,801.62
B) $3,899.17
C) $4,034.20
D) $4,167.29

Question

Quizplus · Accepted Answer

To find the future value of each deposit, we compound each amount to year 8 using the formula FV = PV * (1 + r)^(n), where PV is the present value, r is the interest rate, and n is the number of years. For each deposit:  - Year 1: $750 * (1.07)^7 = $1,205.72  - Year 2: $1,200 * (1.07)^6 = $1,800.48  - Year 3: $500 * (1.07)^5 = $701.29  - Year 4: $250 * (1.07)^4 = $326.71  Adding these future values gives $4,034.20.

Given a 7% Interest Rate, Compute the Year 8 Future