a) Compute the future value of $1000 at 10% compounded annually for 6 years.
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To compute the future value of $1000 at 10% compounded annually for 6 years, you can use the formula for compound interest:
Future Value = Principal * (1 + Interest Rate) ^ Number of Periods
Using this formula, we can substitute in the given values:
Future Value = $1000 * (1 + 0.10) ^ 6
First, calculate the value inside the parentheses:
(1 + 0.10) ^ 6 = 1.10 ^ 6 = 1.771561
Now, multiply the principal by the calculated value:
Future Value = $1000 * 1.771561 = $1771.561
Therefore, the future value of $1000 at 10% compounded annually for 6 years is approximately $1771.561.
To compute the future value of $1000 at 10% compounded annually for 6 years, you can use the formula for compound interest:
Future Value = Present Value * (1 + Interest Rate)^Time
In this case, the present value is $1000, the interest rate is 10% (or 0.10), and the time is 6 years. Plugging these values into the formula:
Future Value = $1000 * (1 + 0.10)^6
To compute this, we will perform the following steps:
Step 1: Calculating the interest factor
Interest Factor = (1 + 0.10)^6
Step 2: Calculating the future value
Future Value = $1000 * Interest Factor
Let's perform the calculations:
Step 1: Calculating the interest factor
Interest Factor = (1 + 0.10)^6
= (1.10)^6
= 1.77156
Step 2: Calculating the future value
Future Value = $1000 * Interest Factor
= $1000 * 1.77156
= $1771.56
Therefore, the future value of $1000 at 10% compounded annually for 6 years is $1771.56.