Calculate the Combined Future Value at the End of Year

question 157

Essay

Calculate the combined future value at the end of year 3 of $1,000 received at the end of year 1, $3,000 received at the end of year 2, and $5,000 received at the end of year 3, all sums deposited at 5 percent.

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Definitions:

Effective Interest Method

A method of calculating the interest revenue for an investment where the interest rate is compounded with each period.

Present Value

The present monetary value of a future sum or a series of cash payments, considering a designated rate of return.

Actuarial Information

Actuarial information involves data and analysis related to assessing financial risks in insurance and finance, especially calculations concerning premiums or pension obligations.

Interest Expense

The cost incurred by an entity for borrowed funds, which is charged as an expense on the income statement over the period the funds are borrowed.