We will be using the concept offuture value simple interestto answer this.
Answer:If the Interest Rate is 10 Percent, then the Future Value in Two Years of $100 Today is$120.
Let's solve this step by step.
Explanation:
Given:
Principal (P) = $100
Interest Rate (R) = 10% = 0.1
Time (T) = 2Years
We have to find the Principal (P) here.
Future ValueSimple Interest Formula: FV= P(1 + RT)
Where,
FV= Future Value
P = Principal
R = Interest rate
T = time.
Substitute the values in the equation.
FV = 100(1 + 0.1 × 2)
FV = 100(1 + 0.2)
FV= 100(1.2)
FV = $120
Thus, if the interest rate is 10 percent, then the future value in two tears of $100 today is$120.
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