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Your friend deposits $3000 in the bank for his graduation ceremony three years from now. Assume that the interest rate is 3% and compounded annually. What will be the amount available at the time of his graduation ceremony?

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ogbe2k3

Answer:

$3278

Explanation:

Solution

Given that:

The Amount Deposited currently at Y0(Present Value) = $3000

Now,

The (Rate of Interest) r =3% compounded annually

The Number of years(n) = 3 years  

What is the Future Value =?

The Future Value = Present Value(1 + r)n

So,

= $3000(1+ .03)3

= $3278

The amount that will available at the time of his graduation ceremony is $3278

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