6. Given a six (6) percent interest rate per year, compute the year seven (7) future...

6. Given a six (6) percent interest rate per year, compute the year seven (7) future value at year end if deposits of $1,000 and $1,500 are made at end of years two (2) and three (3) respectively, and a withdrawal of $500 is made at end of year five (5).

Group of answer choices

A. $5,918.91

B. $3,201.48

C. $2,992.04

D. $2,500.00

E. $2,670.14

Expert Solution

Calculate future value of deposits at end of seven year
Future value	Amount deposits*((1+r)^n)
Year	Future value
2	$1,338.23	1000*(1.06^5)
3	$1,893.72	1500*(1.06^4)
5	-$561.80	-500*(1.06^2)
Future value	$2,670.14

Thus, future value at end of seventh year would be $2,670.14

jeff jeffy answered 2 years ago

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