Present and future value tables of $1 at 9% are presented below.  PV of $1FV of $1PVA of $1FVAD of $1FVA of $110.917431.090000.917431.09001.000020.841681.188101.759112.27812.090030.772181.295032.531293.57313.278140.708431.411583.239724.98474.573150.649931.538623.889656.52335.984760.596271.677104.485928.20047.5233   Ajax Company purchased a three-year certificate of deposit for its building fund in the amount of $290,000. How much should the certificate of deposit be worth at the end of three years if interest is compounded at an annual rate of 9%? Multiple Choice $374,300. $732,816. $375,559. $734,075.

Question
Asked Oct 29, 2019

 

Present and future value tables of $1 at 9% are presented below.
 

  PV of $1 FV of $1 PVA of $1 FVAD of $1 FVA of $1
1 0.91743 1.09000 0.91743 1.0900 1.0000
2 0.84168 1.18810 1.75911 2.2781 2.0900
3 0.77218 1.29503 2.53129 3.5731 3.2781
4 0.70843 1.41158 3.23972 4.9847 4.5731
5 0.64993 1.53862 3.88965 6.5233 5.9847
6 0.59627 1.67710 4.48592 8.2004 7.5233

   
Ajax Company purchased a three-year certificate of deposit for its building fund in the amount of $290,000. How much should the certificate of deposit be worth at the end of three years if interest is compounded at an annual rate of 9%?

 

Multiple Choice

  •  

    $374,300.

  •  

    $732,816.

  •  

    $375,559.

  •  

    $734,075.

check_circleExpert Solution
Step 1

Future value refers to the amount of an investment that will be received after a period by adding interest rate on it. The interest rate is added on the cumulative value of investment that is received every year.

Step 2

$375,559 is correct future amount of three-year certificate of deposit at 9% compounded annual interest rate.

Future ...

Compounded value (axb)
$375,559
Amount deposited (a)
$290,000
FV of $1 at 9% after 3 year (b)
1.29503
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Compounded value (axb) $375,559 Amount deposited (a) $290,000 FV of $1 at 9% after 3 year (b) 1.29503

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