Question

g A savings product requires you to invest the following amounts. 250 today, 450 in one year, 650 in two years, 850 in three years, 1100 in four years. What is the future value (in five years) of these payments, assuming an interest rate of 2.75%

Answer 1

Answer:

$3,520.65

Explanation:

The computation of the future value is shown below:

As we know that

Future value = Present value × (1 + interest rate)^number of years

= $250 × (1 + 0.0275)^5 + $450 × (1 + 0.0275)^4 + $650 × (1 + 0.0275)^3 + $850 × (1 + 0.0275)^2 + $1,100 × (1 + 0.0275)^1

= $286.32 + $501.58 + $705.11 + $897.39 + $1,130.25

= $3,520.65

We do the reversing time period and according to that the calculation can come.