Math Problem Statement
Future value calculation Without referring to the preprogrammed function on your financial
calculator,
use the basic formula for future value along with the given interest rate,
r,
and the number of periods,
n,
to calculate the future value of $1 in the case shown in the following table. Interest rate,** r**
Number of periods,** n**
77%
20 The future value of $1 is
$enter your response here.
(Round to three decimal places.)
Solution
The future value of $1 can be calculated using the formula:
Where:
- is the initial amount (in this case, ).
- is the interest rate per period (expressed as a decimal).
- is the number of periods.
Given:
- or ,
- periods,
We can calculate the future value:
Let me compute this for you.The future value of $1 at an interest rate of 77% over 20 periods is approximately $91,088.873 (rounded to three decimal places).
Would you like more details or have any questions?
Here are 5 related questions for deeper understanding:
- How does the future value change if the interest rate decreases?
- What happens to the future value if the number of periods increases?
- How does compound interest affect long-term investments?
- Can you calculate the future value for different initial amounts?
- What is the difference between simple interest and compound interest?
Tip: A higher interest rate or more periods significantly increases the future value due to compound interest effects.
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Math Problem Analysis
Mathematical Concepts
Compound Interest
Exponential Growth
Formulas
Future Value (FV) formula: FV = P(1 + r)^n
Theorems
Compound Interest Theorem
Suitable Grade Level
Grades 10-12
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