what is the future value in seven years in if you receive 300 in two years and 500 at the end of five years assume an annual compound rate of 8.5 %
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To calculate how much $2,000 will earn over two years at an interest rate of 5% per year, compounded monthly:
1. Divide the annual interest rate of 5% by 12 (as interest compounds monthly) = 0.0042
2. Calculate the number of time periods (n) in months you'll be earning interest for (2 years x 12 months per year) = 24
3. Use the compound interest formula
A = $2,000 x (1+ 0.0042)24
A = $2,000 x 1.106
A = $2,211.64
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