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Compute the future value of $1,000 compounded annually for:

A. 10 years at 5 percent.

B. 10 years at 10 percent.

C. 20 years at 5 percent.

D. Why is the interest earned in part (c) not twice the amount earned in part (a)?

Respuesta :

madethisfortwitch1

Answer:

1628.89

2593.74

2653.30

Because the interest forms an exponential function. This means that the amount of interest earned in each period is increasing and should therefore be more than double.

Step-by-step explanation:

A: 1000*(1.05)¹⁰= 1628.89

B: 1000(1.1)¹⁰= 2593.74

C: 1000(1.05)²⁰= 2653.30

D: Because the interest forms an exponential function. This means that the amount of interest earned in each period is increasing and should therefore be more than double.

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