How much have you saved and how much more do you need? The interest earned on a savings deposit is a function of four variables The amount of money held on deposit (PV) . The method to be used in calculating interest-for example, simple versus compound interest The interest rate applied to the amount on deposit (0) The frequency with which the account's interest is earned-for example, annually, semiannually, quarterly, monthly, or daily Another important variable is the amount of time during which the funds are held in the savings account (n). These variables and their interaction determine the account's balance at a particular point in time. How do these variables work together to determine an account's balance? Which of the following formulas would you choose to calculate the future balance on an account that earns compound interest? O FV=PV x (1 + i) xt OFV= (PV xi)" O FV = P x (1 + i) OFV= PV x (1 + i)" Use either the table of future value factors, your financial calculator, or the future value formula to answer the questions that follow. Future Value Factors Future Value Formula Interest Factors 6.00% 6.50% 7.00% Periods 4.50% 5.00% 5.50% 7.50% 8.00% 8.50% 9.00% 7 1.3609 1.4071 1.4547 1.5036 1.5540 1.6058 1.6590 1.7138 1.7701 1.8280 8 1.4221 1.4775 1.5347 1.5938 1.6550 1.7182 1.7835 1.8509 1.9206 1.9926 9 1.4861 1.5513 1.6191 1.6895 1.7626 1.8385 1.9172 1.9990 2.0839 2.1719 10 1.5530 1.6289 1.7000 1.7908 1.8771 1.9672 2.0610 2.1589 2.2610 2.3674 11 1.6229 1.7103 1.8021 1.8983 1.9992 2.1049 2.2156 2.3316 2.4532 2.5804 12 1.6959 1.7959 1.8832 2.0122 2.1291 2.2522 2.3818 2.5182 2.6617 2.8127 13 1.7722 1.8856 1.9868 2.1329 2.2675 2.4098 2.5604 2.7196 2.8879 3.0658 14 1.8519 1.9799 2.0961 2.2609 2.4149 2.5785 2.7524 2.9372 3.3134 3.3417 15 1.9353 2.0789 2.2114 2.3966 2.5718 2.7590 2.9589 3.1722 3.3997 3.6425 16 2.0224 2.1829 2.3553 2.5404 2.7390 2.9522 3.1808 3.4259 3.6887 3.9703 17 2.1134 2.2920 2.4848 2.6928 2.9170 3.1588 3.4194 3.7000 4.0023 4.3276 18 2.2085 2.4066 2.6215 2.8543 3.1067 3.3799 3.6758 3.9960 4.3425 4.7171 19 2.3079 2.5270 2.7656 3.0256 3.3086 3.6165 3.9515 4.3157 4.7116 5.1417 20 2.4117 2.6533 2.9178 3.2071 3.5236 3.8697 4.2479 4.6610 5.1120 5.6044 21 2.5202 2.7860 3.0782 3.3996 3.7527 4.1406 4.5664 5.0338 5.5466 6.1088 22 2.6337 2.9253 3.2475 3.6035 3.9966 4.4304 4.9089 5.4365 6.0180 6.6586 23 2.7522 3.0715 3.4262 3.8197 4.2564 4.7405 5.2771 5.8715 6.5296 7.2579 Clancy On Clancy's first birthday, his parents deposited $10,000 into a savings account that earns a fixed rate of 9.00% and compounds interest annually. By Clancy's 19th birthday, his account will have accumulated $ (Hint: Round your answer to the nearest cent.) What-If Scenario If Clancy's parents had waited until his 10th birthday to make their initial deposit of $10,000 into the same account, by Clancy's 19th birthday, the balance would have been $ (Hint: Round your answer to the nearest cent.)
