Question

A deposit of $420 earns interest rates of 8.2 percent in the first year and 10.2 percent in the second year. What would be the second year future value

Answer 1

Answer: $500.79

Explanation:

Based on the information that is provided in the question, the second year future value will be calculated as:

FV= PV(1+i) ×(1+j)

where,

FV = Future value

PV = present value

i= interest rate of first year = 8.2% = 0.082

j = interest rate of second year = 10.2% = 0.102

FV= 420(1+0.082)×(1+0.102)

FV = 420(1.082) × (1.102)

FV = $500.79