What is the future value of $9,500 in 8 years? Use a nominal rate (monthly compounding) of 8.25%.

Solution:

Present value (PV) formula finds application in finance to calculate the present day value of an amount that is received at a future date. 

the present value formula is:

PV = FV / (1 + r)ⁿ

Where,

PV = Present value

FV = Future value

r = Rate of interest (percentage ÷ 100) 

n = Number of times the amount is compounding

It is given that

PV = $9,500

r = 0.0825/12 = 0.006875

n = 8 × 12 = 96

t = 8

We know that

PV = FV / (1 + r)ⁿ

Here

FV = PV × (1 + r)ⁿ

Substituting the values

FV = 9,500 × (1 + 0.006875)⁹⁶

FV = 9,500 × (1.006875)⁹⁶

FV = 18,339.0633

Therefore, the future value is $18,339.06

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What is the future value of $9,500 in 8 years? Use a nominal rate (monthly compounding) of 8.25%.

Summary:

The future value of $9,500 in 8 years is $18,339.06