Answer :
The future value of $1,000 today if it draws interest at 8% compounded annually for 10 years is $215
To find:
The future value of the borrowed amount after 10 years
The investment's present value, or PV, is $1000.
The rate of interest, r = 8% =8/100 = 0.08.
The time in years, t = 10.
n = 1 since the sum is compounded yearly.
The future value formula of compound interest:
FV = PV (1 + r / n)n t
FV = 1000(1+0.08/1)1x10
A = $2159
The future value = $2159
What is Future value ?
- Future value is the value of a current asset at some time in the future based on an anticipated growth rate (FV).
- Investors can reasonably forecast an investment's profit using the FV formula.
- Calculating the FV of a market investment can be challenging because to market volatility and uncertainty over future investing conditions.
- One of two methods—compound interest or simple interest—can beused to calculate an asset's FV.
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