|
You have $7,500 to deposit. Regency Bank offers 15 percent per year compounded monthly (1.25 percent per month), while King Bank offers 15 percent but will only compound annually. |
|
|
How much will your investment be worth in 17 years at each bank? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
| Regency Bank | |
| King Bank |
Time value of money (TVM) means that the amount received in the present will have more value than the amount received in the future period. It is based on the concept that the earlier receipts are worth more than the later receipts. The process of finding the future value based on the present value, number of compounding period and the interest rate is called compounding.
It can be calculated as follows:
Where,
FV = Future value
PV = Present value
r = Interest rate
n = Number of compounding period
t = Time period
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
