Items 65 through 68 apply to the appropriate use of interest tables. Given below are the future value factors for 1 at 8% for one to five periods. Each of the items 65 to 68 is based on 8% interest compounded annually.

-If $5,000 is deposited in a savings account today, what amount will be available three years from today?
A) $5,000 ÷ 1.260
B) $5,000 × 1.260
C) $5,000 × 1.080 × 3
D) ($5,000 × 1.080) + ($5,000 × 1.166) + ($5,000 × 1.260)

Question

Items 65 through 68 apply to the appropriate use of interest tables. Given below are the future value factors for 1 at 8% for one to five periods. Each of the items 65 to 68 is based on 8% interest compounded annually.
 
-If $5,000 is deposited in a savings account today, what amount will be available three years from today?
A) $5,000 ÷ 1.260 
B) $5,000 × 1.260 
C) $5,000 × 1.080 × 3 
D) ($5,000 × 1.080) + ($5,000 × 1.166) + ($5,000 × 1.260)

Quizplus · Accepted Answer

To calculate the future value, we need to use the future value factor for 8% and 3 periods, which is 1.260. Multiplying $5,000 by 1.260 gives us the answer of $6,300. Therefore, the best choice is B.

Items 65 Through 68 Apply to the Appropriate Use of Interest