Future value= (principal (1+interest)^number of periods. Future value at 8%- For 5 years= 100(1+.08)^ 5= 1469.32 For
Question:
Future value= (principal (1+interest)^number of periods.
Future value at 8%-
For 5 years= 100(1+.08)^ 5= 1469.32
For 10 years= 100(1+.08)^10= 2158.92
For 15 years = 100(1+.08)^15= 3172.169
Future value at 5%-
For 5 years= 100(1+.05)^ 5= 1276.28
For 10 years= 100(1+.05)^10= 1628.89
For 15 years= 100(1+.05)^ 15= 2078.92
it can be said that when there will be higher interest rate the future value will always be higher because higher interest rate will be leading to higher amount of compounding so 8% of compounding will produce higher rate of return than 5% of compounding.
it can also be said that there will be higher time duration for the future value then there will be high amount of compounding as well due to higher time and it can be seen that when there are increasing the time it is leading to increase in the future value as well.