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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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What is the future value on January 1, 2025, of $20,000 deposited on January 1, 2019, which accumulates interest at 10% compounded annually?

To determine

Determine the future value on January 1, 2025, for the amount of $20,000 deposited on January 1, 2019 at an annual interest rate of 10%, using compound interest.

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 $20,000 is made on January 1, 2019

i - Interest is compounded annually at 10%

n - Number of years from January 1, 2019 to January 1, 2025 is 6 years.

Determine the future value on January 1, 2025.

FV=PV×(fn=6,i=10%)=$20,000×1

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