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Time value of money: Calculate the future value of $2000

3. Calculate the future value of $2000 in

a. Five years at an interest rate of 5% per year

b. Ten years at an interest rate of 5% per year

c. Five years at an interest rate of 10% per year

d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)?

Solution Preview

FV = PV (1+rate)^n

(a)
Amount 2,000
Rate 5%
Period 5 years
FV = 2,000 (1+5%)^5=$2,552.56

(b)
Amount ...

Solution Summary

The solution explains how to calculate the future value of money, using simple, step by step calculations and explanation.

$2.19