Calculate the future value of a 7year loan of 10000000 at an

Calculate the future value of a 7-year loan of $100,000.00 at an interest rate of 12% compounded annually using the table below. $112,000.00 $122, 019.00 $221, 068.00 $340,000.00

Solution

Initial Investment = $100,000.00

Looking at the table entry with number of perios = 7years /1 year = 7 (since we need to calculate the amount after 7 years and 1 year is equal to 1 period)

Rate of Interest = 12% , but effective interest rate = 12%/1 = 12% (since it is compounded annually)

Hence look for period 7 and interest 12 we get the value as 2.21068

Final Amount = $100,000 * 2.21068 = $221,068.00

Hence the correct answer is Option C