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Calculating Future Values of Compound Interest

Compute the future value of $1,000 compounded annually for
a. 10 years at 5 percent
b. 10 years at 7 percent
c. 20 years at 5 percent
d. Why is the interest earned in part (c) not twice the amount earned in part (a)

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Solution :

a. 10 years at 5 percent
Future Value = Present Value*(1+r/100)^n =1000*(1+0.05)^10= $1,628.89

b. 10 years at 7 ...

Solution Summary

Solution describes the steps in calculating steps in calculating future values for three combinations of period and rates.