CFIN -STUDENT EDITION-ACCESS >CUSTOM<
CFIN -STUDENT EDITION-ACCESS >CUSTOM<
6th Edition
ISBN: 9780357752951
Author: BESLEY
Publisher: CENGAGE C
Question
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Chapter 4, Problem 1PROB
Summary Introduction

If S invests $700 today at 4% interest compounded annually, calculate the balance after four years.

Future value is the value of the current investment or series of payments in the future compounded at predetermined interest rate for a specified period.

FV=PV(1+r)n

Here,

The future value is “FV”.

The present value is “PV”.

The interest rate is “r”.

The maturity period of time period is “n”.

Expert Solution & Answer
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Explanation of Solution

Calculate the future value as follows:

FV=PV(1+r)n=$700×(1+4%)4=$700×1.16985856=$818.900992 or $818.90

Therefore, the future value is $818.90.

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