Wells Fargo offers a new savings product: You make the following payments over the next 5 years and will then receive a lump sum payment 25 years from now. Year Payment 1 300 2 400 3 500 4 600 5 700 The annual interest rate is 7% for the next 5 years, then 2% for the following 20 years. What is the future value of your investment in year 25

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A: Future value = PV * (1+I)N -1 / I.PV= Present value.I= Interest rate N= Number of periods.Cal

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Effective Interest Rate

The term interest rate can be defined as the amount that is charged by the lender as a percentage on the principal amount. Interest rate which is charged annually is known as annual percentage rate.