1. You invest $3,000 a yearfor three years at 12 percent. a. What is the value o
ID: 2662391 • Letter: 1
Question
1. You invest $3,000 a yearfor three years at 12 percent.
a. What is the value of yourinvestment after one year? Multiply $3,000 X 1.12
b. What is the value of yourinvestment after two years? Multiply your answer to part a by1.12.
c. What is the value of yourinvestment after three years? Multiply your answer to part b by1.12. This gives your final answer.
d. Confirm that your final answeris correct by gong to Appendix A (future value of $1), and lookingup the future value for n = 3, and I = 12 percent. Multiply thistabular value by $3,000 and compare your answer to the answer inpart c. There may be a slight difference due to rounding.
Explanation / Answer
Solution has been given alongwith the questionitself. ==================================== 1. You invest $3,000 a year for three years at 12percent a. What is the value of your investment after one year? Multiply $3,000 X 1.12 $3,000x 1.12 = $3,360 another way to do it ($3,000 +($3,000x12%)) b. What is the value of your investment after two years?Multiply your answer to part a by1.12 $3,360x 1.12 = $3,763.20 c. Whatis the value of your investment after three years? Multiply youranswer to part b by 1.12. This gives your finalanswer $3,763.20x 1.12 = $4,214.78 d. Confirm that your final answer is correct by gong to Appendix A(future value of $1), and looking up the future valuefor n = 3, and I = 12 percent. Multiply this tabular value by$3,000 and compare your answer to the answerin part c. There may be a slight difference due to rounding Futurevalue of $1 at the end of 3rd year at 12 % compoundedannually = 1.4049 $3,000x 1.4049 = $4214.70Related Questions
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