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11. Your bank pays 2.5% interest per year. You put $1000 in the bank today and $500 more in the bank in one year. How much will you have in the bank in 2 years?

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facundobuzzetti

Answer:

Total FV= $1,563.13

Explanation:

Giving the following information:

Interest rate= 2.5% = 0.025

Number of periods= 2 years

To calculate the future value (FV), we need to use the following formula on each deposit:

FV= PV*(1+i)^n

FV1= 1,000*(1.025^2)= 1,050.63

FV2= 500*(1.025^1)= 512.5

Total FV= $1,563.13

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