Problem 5-33 Calculating Future Values [LO 4] You have an investment that will p
ID: 2615254 • Letter: P
Question
Problem 5-33 Calculating Future Values [LO 4]
You have an investment that will pay you 1.13 percent per month.
Requirement 1:
How much will you have per dollar invested in one year? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Future value
$
Requirement 2:
How much will you have per dollar invested in two years? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
Future value
$
References
eBook & Resources
You have an investment that will pay you 1.13 percent per month.
Explanation / Answer
Future value of an amount can be computed as -
FV = Amount x (1 + r)n
where, r = periodic rate of interest, n = no. of time periods
1) r = 1.13% or 0.0113, n = 12 (months in one year)
FV = $1 x (1 + 0.0113)12 = $1.1443532 or $1.14
2) r = 0.0113, n = 24
FV = $1 x (1 + 0.0113)24 = $1.30954424 or $1.31