Question

orange credit union expects an average annual growth rate of 10% for the next four years. if the assets of the credit union currently amount to $4.5 million, what will the forecasted assets be in 4 years​

Answer 1

Given :

The rate of growth = r = 10%

The present amount = P = $4.5 million

The time period = t = 4 years

To Find :

The Forecasted value in 4 years

Solution :

Let The Forecasted value in 4 years = $A

Forcast value in t years = initial value × $(1+\dfrac{rate}{100}) ^{time}$

Or,                               A = P × $(1+\dfrac{r}{100}) ^{t}$

Or,                               A = $4.5 million × $(1+\dfrac{10}{100}) ^{4}$

Or,                               A = $4.5 million × $(1.1)^{4}$

∴                                  A = $4.5 million × 1.464

i.e                                A = $6.58 million

Hence, The Forecasted value in 4 years is $6.58 million   . Answer