RatedrillFuture value of a lump sum
A time value of money problem from Ratedrill. Solve it with one answer box, with fresh numbers on every attempt and the formula, calculator keystrokes and Excel version in the worked answer, and it is checked the moment you submit.
The task
You deposit $1,500 in an account that earns 3.25% per year, compounded annually. You make no other deposits or withdrawals. How much is in the account after 30 years?
What this problem teaches
The formula: FV = PV × (1 + r)^n. Set P/Y = C/Y = 1, so I/Y is the rate per period. Cash you pay out is negative and cash you receive is positive.
A hint if you get stuck
Grow the deposit forward: FV = PV × (1 + r)^n.
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