On January 1, 2016, you deposited $6,400 in a savings acc each year. ccunt vill
ID: 2567686 • Letter: O
Question
On January 1, 2016, you deposited $6,400 in a savings acc each year. ccunt vill eam 12 percent annual compound interest, which il be added to the fund balance at the end of Required: 1. What will be the balance in the savings account at the end of 3 years? (Future Value of S1, Present Value of $1, Future Value Annuity of S1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your final answers to 2 decimal places.) lance in the Savings Account 2. What is the total interest for the 3 years? (Future Value of $1, Present Value of S1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your final answers to 2 decimal places.) 3. How much interest revenue did the fund earn in 2016 and in 2017? (Round your final answers to 2 decimal places.) 2016 Interest Revenue 2017 Interest RevenueExplanation / Answer
1)
Balance at the end of 3 years
= Principal x ( 1 + r ) ^ n
Where,
Principal = $6,400
r = Rate of interest = 12% or 0.12
n = Years = 3
So, Future value
= $6,400 x 1.12 ^ 3
= $6,400 x 1.404928
= $8,991.54
2)
Total interest
Future value - Present value
= $8,991.54 - $6,400
= $2,591.54
3)
Interest for 2016
= Future value at end of 2016 - Value at beginning of 2016
= $6,400 x 1.12 - $6,400
= $7,168 - $6,400
= $768
Interest for 2017
= Value at end of 2017 - Valie at beginning of 2017
= $6,400 x 1.12 ^ 2 - $7,168
= $8,028.16 - $7,168
= $860.16