Compute the future value of $100 at an 8 percent interest rate five, ten, and fifteen years into the future.
Posted by Shafique Ahmed in and fifteen years into the future, Compute the future value of $100 at an 8 percent interest rate five, ten
Compute the future value of $100 at an 8 percent interest rate five, ten, and fifteen years into the future.
Solution:
Present Value (PV) = $100
Interest Rate (r) = 8% or 0.08 per year
FV5 =? When Time (t) = 5 years
FV10 =? When Time (t) = 10 years
FV15 =? When Time (t) = 15 years
FV5 = PV * (1 + r) t
FV5 = 100 * (1 + 0.08) 5
FV5 = 100 * (1.08) 5
FV5 = 100 * 1.4693280768
FV5 = $146.93
FV10 = PV * (1 + r) t
FV10 = 100 * (1 + 0.08) 10
FV10 = 100 * (1.08) 10
FV10 = 100 * 2.15892499727278669824
FV10 = $215.89
FV15 = PV * (1 + r) t
FV15 = 100 * (1 + 0.08) 15
FV15 = 100 * (1.08) 15
FV15 = 100 * 3.172169114198268924301601144832
FV15 = $317.22
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