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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Future Value of an Investment Using the future value tables, solve the following.

Required:

  1. 1. What is the future value on December 31, 2023, of a deposit of $35,000 made on January 1, 2020, assuming interest of 10% compounded annually?
  2. 2. What is the future value on December 31, 2023, of a deposit of $10,000 made on January 1,2020, assuming interest of 16% compounded quarterly?
  3. 3. What b the future value on December 31, 2023, of a deposit of $25,000 made on January 1, 2020, interest of 12% compounded semiannually?

1.

To determine

Determine the future value on January 1, 2023, for the amount of $35,000 deposited on January 1, 2020 at an annual interest rate of 10%, assuming that interest is compounded annually.

Explanation

Future Value of a single sum: The future value is value of single present amount (single sum) compounded at an interest rate until a particular future date.

PV - Deposit of $35,000 is made on January 1, 2020

i - Interest is compounded annually at 10%

n - Number of years from January 1, 2020 to December 31, 2023 is 4 years.

Determine the future value on December 31, 2023.

FV=PV×(fn=4,i=10%)=$35,000×1

2.

To determine

Determine the future value on December 31, 2023, for the amount of $10,000 deposited on January 1, 2020 at an annual interest rate of 16%, which is compounded quarterly.

3.

To determine

Determine the future value on December 31, 2023, for the amount of $25,000 deposited on January 1, 2020 at an annual interest rate of 12%, which is compounded semiannually.

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