Time value of money: Calculate the future value of $2000
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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)?
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Solution Summary
The solution explains how to calculate the future value of money, using simple, step by step calculations and explanation.
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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 ...
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