1. You invest $3,000 a yearfor three years at 12 percent.a. What is th

QUESTION

1. You invest $3,000 a yearfor three years at 12 percent.a. What is the value of yourinvestment after one year? Multiply $3,000 X 1.12b. What is the value of yourinvestment after two years? Mu
Solution has been given alongwith the questionitself.====================================1. You invest $3,000 a year for three years at 12percent a. What is the value of your investment after one year? Multiply $3,000 X 1.12 $3,000x 1.12 = $3,360 another way to do it ($3,000 ($3,000×12%)) b. What is the value of your investment after two years? Multiply your answer to part a by1.12 $3,360x 1.12 = $3,763.20 c. Whatis the value of your investment after three years? Multiply youranswer to part b by 1.12. This gives your finalanswer $3,763.20x 1.12 = $4,214.78 d.

firm that your final answer is correct by gong to Appendix A(future value of $1), and looking up the future valuefor n = 3, and I = 12 percent. Multiply this tabular value by$3,000 and compare your answer to the answerin part c. There may be a slight difference due to rounding Futurevalue of $1 at the end of 3rd year at 12 % compoundedannually = 1.4049 $3,000x 1.4049 = $4214.70

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