Question 154497: Find the present value of $5600 to be compounded at 7% for 9 years?
Answer by ariverajr(1)   (Show Source):
You can put this solution on YOUR website! I did this using excel. Below is the answer which I checked against a financial calculator. The basis of the this problem is that it compounds interest every year so that means only once. So take your starting value and multiply it by the interest rate and then add the original amount to that interest rate. That will give you the total for the first year. Do that same thing for every year until the ninth and it will give you the total at the end of nine years. See tale below
Starting Cash Interest Rate Total Interest Total with Interest Year
$5,600.00 $0.07 $392.00 $5,992.00 1
$5,992.00 $0.07 $419.44 $6,411.44 2
$6,411.44 $0.07 $448.80 $6,860.24 3
$6,860.24 $0.07 $480.22 $7,340.46 4
$7,340.46 $0.07 $513.83 $7,854.29 5
$7,854.29 $0.07 $549.80 $8,404.09 6
$8,404.09 $0.07 $588.29 $8,992.38 7
$8,992.38 $0.07 $629.47 $9,621.84 8
$9,621.84 $0.07 $673.53 $10,295.37 9
At the end of nine years it would be 10,295.37.
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