Mountain Bikes, Inc. (MBI), and Nero enter into a contract for a sale of amountain bike. MBI, a merchant who deals in goods of t
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$100,000 was allocated by a stockbroker to a portfolio yielding 4% annually compounded. If no withdrawals are taken, there will be $117,352 left in the account after four years.
Given a certain rate of return, present value (PV) is the current value of a future financial asset or stream of cash flows. A discount rate or the interest rate that could be obtained through investment is applied to the future value to get the present value.
According to the continuously compounded interest formula,
FV = PV
Here,
Present Investment Value, or PV
the interest rate, I
T = time in years
So,
In light of the specified
PV = $ 100,000
I = 4% = 0.04
t = 4 years
Hence
FV stands for "Final Investment Value"
Then,
FV = 100,000 * e⁰.⁰⁴ˣ⁴
FV = 100,000*e⁰.¹⁶
FV = 100,000 * 1.173510871
FV = 117351.0871
FV = 117351
Hence
The balance in the account after four years was = $117,352
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