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Salsk061 [2.6K]
3 years ago
8

Find the future value one year from now of an $8,000 investment at a 3 percent annual compound interest rate. Also calculate the

future value if the investment is made for two years.
Business
1 answer:
Liono4ka [1.6K]3 years ago
6 0

Answer:

If investment is made for one year, Future value = $8240

If investment is made for two years, Future value = $8487.2

Explanation:

The future value of a cash flow can be calculated using the following formula,

Future value = Present value * (1+i)^t

Where,

  • i is the rate of interest
  • t is the time period

As the interest rate is compounded annually, the future value after one year will be,

<u>After one year</u>

Future value = 8000 * (1+0.03)^1

Future value = $8240

<u>After two year</u>

Future value = 8000 * (1+0.03)^2

Future value = $8487.2

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