Question

You invest $3,300 for three years at 8 percent. a. What is the value of your...

You invest $3,300 for three years at 8 percent.

a. What is the value of your investment after one year? Multiply $3,300 × 1.08.

b. What is the value of your investment after two years? Multiply your answer to part a by 1.08. (Round your answer to 2 decimal places.)

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. (Round your answer to 2 decimal places.)

d. Combine these steps using the formula FV = PV × (1 + i)n to find the future value of $3,300 in 3 years at 8 percent interest. (Round your answer to 2 decimal places.)

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Homework Answers

Answer #1

a. The value of your investment after one year = Amount of Investment * (1+ Rate of Investment)

= $ 3,300 * 1.08

= $ 3,564

Answer = $ 3,564

b. The value of your investment after two years = The value of your investment after one year *  (1+ Rate of Investment)

= $ 3,564*1.08

= $ 3,849.12

Answer =$ 3,849.12

c.

The value of your investment after three years = The value of your investment after two year *  (1+ Rate of Investment)

= $ 3,849.12 *1.08

= $ 4,157.05

Answer = $ 4,157.05

d. FV = PV × (1 + i)n

where FV = Future Value

PV = Present Value

i = rate of Interest

n = 3 Years

FV = $ 3,300 * (1+8%)^3

= $ 4,157.05

Answer = $ 4,157.05

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