Problem 320 algorithmic Question Help If 1700 is invested n

Problem 3-20 (algorithmic) Question Help * If $1,700 is invested now, $2,200 two years from now, and $2,700 four years from now at an interest rate of 5% compounded annually, what will be the total amount in 9 years? Click the icon to view the interest factors for discrete compounding when i-5% per year The total amount in 9 years will be S(Round to the nearest dollar.)

Solution

The total amount in 9 years will be is $ 9,177

Explanation below

Given information:

A person planned to invest in 9 years as follows:

first year = amount $1700

Second year = amount $2200

Fourth-year = Amount $2700

the annual rate of interest is 5%

Calculation of future equivalent worth:

It can be obtained by the following formula:

F = P(1 + f )^N1 + P(1 + f)^N2 + P(1 + f)^N3 +...........(1)

Where,

F = Future equivalent worth

P = present worth of investment

N = number of years

f = Rate of interest

Substitute the respective value in equation

P = 1700(1.05)⁹ + 2200(1.05)⁷ + 2700(1.05)⁵

= 1700(1.551) + 2200(1.407) + 2700(1.276)

= 2636.7 + 3095.4 + 3445.2

= $ 9,177.3

Hence the future equivalent worth of present investment would be $ 9,177.3