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21 August, 15:35

A deposit of $870 earns interest rates of 10.7 percent in the first year and 8.7 percent in the second year. What would be the second year future value?

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  1. 21 August, 15:55
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    Year2 = $1,046.88

    Explanation:

    Giving the following information:

    A deposit of $870 earns interest rates of 10.7 percent in the first year and 8.7 percent in the second year.

    We need to use the following formula:

    FV = PV * (1+i) ^n

    Year1 = 870*1.107 = 963.09

    Year2 = 963.09*1.087 = 1,046.88
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