Question

1. What is the future value of $15,000 saved at i=38.45% , compounded annually in 1 year?

2. What is the future value of $15,000 saved at i=38.45% , compounded annually in 2 years?

3. What is the future value of $15,000 saved at i=38.45% , compounded semi-annually in 2 years?

4. What is the future value of $15,000 saved at i=38.45% , compounded quarterly in 2 years?

Answer 1

Question 1:

Present Value = PV = $15,000

n = 1 year

i = 38.45%

Future Value = PV * (1+i)^n

= $15,000 * (1+38.45%)^1

= $15,000 * 1.3845

= $20,767.50

Therefore, future value in 1 year is $20,767.50

Question 2:

Present Value = PV = $15,000

n = 2 year

i = 38.45%

Future Value = PV * (1+i)^n

= $15,000 * (1+38.45%)^2

= $15,000 * 1.91684025

= $28,752.6038

Therefore, future value in 2 years is $28,752.60

Question 3:

Present Value = PV = $15,000

n = 4 semi annual years

i = 38.45%/2 = 19.225%

Future Value = PV * (1+i)^n

= $15,000 * (1+19.225%)^4

= $15,000 * 2.02054871

= $30,308.2306

Therefore, future value in 2 years is $30,308.23

Question 4:

Present Value = PV = $15,000

n = 8 Quarters

i = 38.45%/4 = 9.6125%

Future Value = PV * (1+i)^n

= $15,000 * (1+9.6125%)^8

= $15,000 * 2.08391819

= $31,258.7728

Therefore, future value in 2 years is $31,258.77