Answer:
a. Value of investment at the end of 6 years = $4,504
b. Table Completion:
Rate per year Future Value Factor Amount
1% 1.051 $4,204
2% 1.104 $4,416
3% 1.159 $4,636
4% 1.217 $4,868
5% 1.276 $5,104
6% 1.338 $5,352
Explanation:
Data and Calculations:
Investment = $4,000
Interest rate = 2%
Period of investment = 6 years
Future value factor at 2% for 6 years = 1.126
Value of investment at the end of 6 years = $4,504 ($4,000 * 1.126)
b) Investment = $4,000
Interest rates = from 1% to 6%
Period of investment, t = 5 years
Future value factors are as follows:
Rate per year Future Value Factor Amount
1% 1.051 $4,204 ($4,000 * 1.051)
2% 1.104 $4,416 ($4,000 * 1.104)
3% 1.159 $4,636 ($4,000 * 1.159)
4% 1.217 $4,868 ($4,000 * 1.217)
5% 1.276 $5,104 ($4,000 * 1.276)
6% 1.338 $5,352 ($4,000 * 1.338)
