Question

What is the future value of $750 one year from today if the interest rate is 2.5 percent? a. $768.75 b. $766.50 c. $770.23 d. none of the above are correct to the nearest cent?

Answer 1

To get the future value of this amount, we should use the formula I = Prt so that we could get the interest and then add it to the principal amount to get the future value.

I = Prt

Where: P stands for principal, r for the rate and t for time.

Plugging in the values in the given:

I = (750) (0.025) (1)

Interest = 18.75

Future value = Principal + Interest

= 750 + 18.75

= 768.75

The answer is letter a.