If the present value is $410.86 and the rate of return is 0.026, how much will you have in one year?

Question

BlackTom AI · Accepted Answer

To determine how much you will have in one year, use the future value calculation for one-period compounding: FV = PV × (1 + r).

Here, PV = 410.86 and r = 0.026. First compute the multiplier: 1 + r = 1.026.

Next multiply: 410.86 × 1.026 = 410.86 × 1 + 410.86 × 0.026.
- 410.86 × 1 = 410.86
- 410.86 × 0.026 = 10.68236

Add these results: 410.86 + 10.68236 = 421.54236.

Since monetary amounts are typically rounded to the nearest cent, round 421.54236 to 421.54.

Common pitfalls to avoid:
- Forgetting to add the interest by multiplying by (1 + r) and instead using PV × r alone (which yields only the interest, not the total).
-Rounding too early in the calculation, which can slightly alter the final cent value.
-Using a rate interpreted per period differently (e.g., treating 0.026 as 2.6% per year when the period is different) when the problem specifies one-year time horizon.

FINA2720.MERGED.202610 Practice with Respondus and Time Value of Money- Requires Respondus LockDown Browser

If the present value is $410.86 and the rate of return is 0.026, how much will you have in one year?

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