-secure I nttps://ereader.chegg.com/#/books/9780134487199/cfi/7931/4 Long-Term F

Question

-secure I nttps://ereader.chegg.com/#/books/9780134487199/cfi/7931/4 Long-Term Future Value and Present Value Factors The future value or present value of an investment s ment at different points in time. We can calculate the future value or present value of any investment by knowing (or assuming) information about the three factors we listed earlier (1) the principal amount, (2) number of Exhibit 14A-1, we calculated the interest that would be earned on (1) a $10,000 principal, (2) invested for five years,p) at 6% interest. The future value of the investment is simply its worth at the end of a speefic time frame tfor example, five years), or the original principal plus the interest earned. In our example, the future value of the investment is as follows: imply refers to the value of an invest- information abour the three factors we listed s, and 3) the interest rate. For example, in the interest rate. For Future value Principal + Interest earned S 10,000 + S3.383 " $13.383 If we invest S10,000 toda, its presot ndloe is simply $10,000. Present value is the value of an investment today So another way of stating the future value is as follows:

Explanation / Answer

Answer

$3383 is the interest earned during five years on investment of $10000 at 6% interest.

Working is shown below--

Thats how you get $3383 as interest.

Year Opening Investment (A) Interest rate Interest (C=A x B) Closing Investment (D=A+C) 1 10000 6% 600.00 10600 2 10600 6% 636.00 11236 3 11236 6% 674.16 11910 4 11910 6% 714.61 12625 5 12625 6% 757.49 13383 TOTAL 3383

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