Question

A deposit of $1,000 earns the following interest rates: 8.0 percent in thefirst year, 7.0 percent in the second year, and 9.0 percent in the third year.What would be the third-year future value (at t=3)?O $1,248.05O $1,082.15O $1,259.60O $3,030.00

Answer 1

Explanation

We are given that the initial deposit is $1000

We are asked to get the future value will be obtained as follow

$Future\text{ value=}1000\times(1+\frac{8}{100})(1+\frac{7}{100})(1+\frac{9}{100})$

simplifying further

$Future\text{ value=1000}\times1.08\times1.07\times1.09=1259.6$

Thus, the future value will be $1259.60