Future Value Compute the future value in year 4 of a $500 deposit in year 1 and another $1,000 deposit at the end of year 3 using a 5 percent interest rate.
A)$1,625.00
B)$1,628.81
C)$1,800.00
D)$1,823.26

Question

Quizplus · Accepted Answer

The future value of the $500 deposit after 3 years (from year 1 to year 4) at 5% interest is $500 * (1.05)^3 = $578.81. The future value of the $1,000 deposit after 1 year (from year 3 to year 4) at 5% interest is $1,000 * (1.05) = $1,050. Adding these gives $578.81 + $1,050 = $1,628.81.

Future Value Compute the Future Value in Year 4 of a $500