Question

What is the future value of $2,000 invested at the beginning of each year for six...

What is the future value of $2,000 invested at the beginning of each year for six years at 4%?

a.

$13,796.59
b.

$14,020.33
c.

$13,286.11
d.

$14,426.67
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Homework Answers

Answer #1

Calculation of future value

Year Start principal (1) Starting balance (2) Interest@4% (3) (2*4%)

End balance

(4) (2+3)
1 2,000 2,000 2,000*4%=80 2,080
2 2,000+2,000 =4,000 2,080+2,000=4,080 4080*4%=163.2 4243.2
3 4,000+2,000=6,000 4243.2+2,000=6243.2 6243.2*4%=249.73 6,492.73
4 6,000+2,000=8,000 6492.73+2000=8492.73 339.72 8832.65
5 8,000+2,000=10,000 10832.65 433.31 11265.95
6 10,000+2,000=12,000 13265.95 530.64 13,796.59

Answer : 13,796.59 (a)

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