Question

Financial contracts involving investments, mortgages, loans, and so on are based on either a fixed or a variable interest rate. Assume that fixed interest rates are used throughout this question. Heather deposited $1,700 at her local credit union in a savings account at the rate of 9.8% paid as simple interest. She will earn interest once a year for the next thirteen years. If she were to make no additional deposits or withdrawals, how much money would the credit union owe Heather in thirteen years?

Answer 1

Future value of the investment= $3,865.8

Step-by-step explanation:

Giving the following information:

Initial deposit (P)= $1,700

Interest rate (r)= 9.8% simple interest

Number of periods (t)= 13 years

To calculate the future value, we need to use the following formula:

FV= P*r*t + P

FV= 1,700*0.098*13 + 1,700

FV= $3,865.8