Concept explainers
Find all monetary answers to the nearest cent. Use tables and formulas from the chapter as necessary. Finding the Future Value of a Deposit Find the future value of each deposit.
$1000 for 5 years at 4% simple interest
To calculate: The future value of the deposits if the principal amount is $1,000, the rate of simple interest is 4% and the time is 5 years.
Answer to Problem 1T
Solution:
The future value of the deposit is $1,200.
Explanation of Solution
Given:
The principal amount is $1,000, the rate of simple interest is 4% and the time is 5 years.
Formula used:
P is the principal amount, r is the simple interest rate and t is the time.
Calculation:
To compute the future value of the deposit, multiply the principal with adding 1 into the product of rate and time:
After multiplying the aforementioned equation, the result will be:
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