question archive May I ask for an explanation and supporting solution to the problem for a better understanding
May I ask for an explanation and supporting solution to the problem for a better understanding
Subject:AccountingPrice:2.84 Bought6
May I ask for an explanation and supporting solution to the problem for a better understanding. Thank you!
9. You expect to receive P1,000 at the end of each of the next 3 years. You will deposit these payments into an account which pays 10%, compounded semiannually. What is the future value of these payments, that is, the value at the end of the third year?
a) P665.50
b) P7,986.00
c. P3,318.01
d. P3,993.00
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Future Value of payments = 1000*(1+10%/2)^(2*2) + 1000*(1+10%/2)^(1*2) + 1000
=3318.00625
=$3318(Approx.)
Step-by-step explanation
The value at the end of the third year=$1,000(FVIF5%,4) + $1,000(FVIF5%,2) + $1,000
=$1,000(1.2155) + $1,000(1.1025) + $1,000
= $1,215.50 + $1,102.50 + $1,000
= $3,318.00
