Question

Determine how much $1,000 deposited in a savings account paying 8% (compounded annually) will be worth after 5 years.

how would you insert this in a financial calculator? confused on how to input (FVIF .08,5)

Answer 1

Calculate for FV in a financial cal, punch in:

N=5

I/Y =0.08

PV =1000

The answer will come as 1469.33

You cannot enter FVIF(.08,5), you have to look at the future value factor in a future value table of $1, at 8% and at year 5, the FVIF is 1.4693

So the future value will become:

=PResent value*FVIF(.08, 5 years)

=1000*1.4693

=1469.30

Both the table method and financial calculator almost gives the same answer, but the financial calculator method is precise.