What is the future value of $700 deposited for one year earning a 10% interest rate annually?
Future Value of Amount
The concept of time value of money states that money in hand today is worth more than money to be received in the future because of the earnings potential of money. This concept is demonstrated by the future value, which calculates the deposit value at a future date given the interest earned on money.
Answer and Explanation:
- Amount = $700
- Time = 1 Year
- Rate = 10% = 0.10
The formula for calculating future value is as follows -
- Future Value = Present Value * ( 1 + r ) ^ t
Using the given values -
- Future Value = 700 * ( 1 + 0.10 ) ^ 1
- Future Value = 700 * 1.10
- Future Value = $770.0
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from Financial Accounting: Help and ReviewChapter 5 / Lesson 16
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