Compute the future value in year 10 of a $1,000 deposit in year 1, and another $1,500 deposit at the end of year 4 using an 8 percent interest rate.
A) $3,120.73
B) $4,379.31
C) $4,500.00
D) $5,397.31

Question

Quizplus · Accepted Answer

The future value of a single sum can be calculated using the formula FV = PV * (1 + r)^n, where FV is the future value, PV is the present value, r is the interest rate per period, and n is the number of periods. For the $1,000 deposit in year 1, the future value in year 10 is calculated as $1,000 * (1 + 0.08)^(10-1) = $1,999.00 (since it has 9 years to grow). For the $1,500 deposit at the end of year 4, the future value in year 10 is calculated as $1,500 * (1 + 0.08)^(10-4) = $2,380.31 (since it has 6 years to grow). Adding these two amounts gives a total future value of $1,999.00 + $2,380.31 = $4,379.31.

Compute the Future Value in Year 10 of a $1,000