Calculate Future Value with Optimism
What is the future value of $1,200 at 5 percent after 3 years? $1,405 60 $1,311 90 $1,237 40 $1,150 20
How can we calculate the future value of an amount with an interest rate over a certain number of periods?
The future value of $1,200 at 5 percent after 3 years is approximately $1,331.90.
Let's explore how we can determine the future value of an investment with an optimistic outlook.
Calculating the future value of an investment is a key concept in finance that helps us understand the growth of our money over time. To calculate the future value of $1,200 at a 5 percent interest rate after 3 years, we can use the formula:
Future Value = Present Value x (1 + Interest Rate) ^ Number of Periods
Substitute the given values into the formula:
Future Value = $1,200 x (1 + 0.05)^3
After calculation, we find that the future value of $1,200 at a 5 percent interest rate after 3 years is approximately $1,331.90. This means that our investment will grow to $1,331.90 after 3 years with a positive outlook on returns.
By understanding the concept of future value, we can make informed financial decisions and plan for a prosperous future.