Question

# What is the future value? Juan Garza invested \$105,000 4 years ago at 16 percent, compounded...

What is the future value?

Juan Garza invested \$105,000 4 years ago at 16 percent, compounded quarterly. How much has he accumulated? Use Appendix A for an approximate answer but calculate your final answer using the formula and financial calculator methods. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Future value using formula:

Rate = 0.16 / 4 = 0.04 ( since it is compounded quarterly, we divide by 4)

n = 4 * 4 = 16 ( since it is compounded quarterly, we multiply by 4)

FV = PV ( 1 + r)n

FV = 105,000 ( 1 + 0.04)16

FV = 105,000 ( 1.872981 )

FV = \$196,663

Future value using financial calculator:

First set the calculator to 4 compounding periods... to do that click 2ND I/Y = 4

Keys to use in a financial calculator: 2ND I/Y = 4, PV = -105,000, I/Y = 16, N = 16, CPT FV)

You get \$196,663.03.

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