Question

Eric & Stephanie have $14,500 saved for a down payment on a home. What is the future value of their savings in five years if it is invested
at 12% return?

Answer 1

Answer:

FV = $25553.9544064  rounded off to  $25553.95

Explanation:

The future value of a cashflow or amount can be calculated using the following formula,

FV = PV * (1+r)^t

Where,

• FV represents future value
• PV represents Present value
• r is the rate of return or interest
• t is the time period

We know the values for PV, r and t. Plugging in these values in the formula above, we can calculate the future value to be,

FV = 14500 * (1+0.12)^5

FV = $25553.9544064  rounded off to  $25553.95