Business and finance texts refer to the value of an investment at a future time as its future value. If an investment of P dollars is compounded yearly at an interest rate of r as a decimal, then the value of the investment after t years is given by the formula below.

Future value = P (1 + r)^t

In this formula, (1 + r)^t is better known as the future value interest factor, so the formula above can also be written as the formula below.

Future value = P Future value interest factor

Financial officers normally calculate this (or look it up in a table) first.

(a) What future value interest factor will make an investment double? Triple?

double investment
triple investment

(b) Say you have an investment which is compounded yearly at a rate of 9%. Find the future value interest factor for a 9-year investment. (Round your answer to two decimal places.) (c) Use the results from part (b) to calculate the 9-year future value if your initial investment is $6,000. $