You invest $2,500 a year for three years at 8 percent. a. What is the value of
Question:
You invest $2,500 a year for three years at 8 percent.
a. What is the value of your investment after one year? Multiply $2,500 × 1.08.
b. What is the value of your investment after two years? Multiply your answer to part a by 1.08.
c. What is the value of your investment after three years? Multiply your answer to part b by 1.08. This gives your final answer.
d. Confirm that your final answer is correct by going to Appendix A (future value of $1), and looking up the future value for n = 3, and i = 8 percent. Multiply this tabular value by $2,500 and compare your answer to the answer in part c. There may be a slight difference due to rounding.
Future ValueFuture value (FV) is the value of a current asset at a future date based on an assumed rate of growth. The future value (FV) is important to investors and financial planners as they use it to estimate how much an investment made today will be worth...
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Foundations of Financial Management
ISBN: 978-0077454432
14th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen