Future value: Business and finance texts refer to the value of an investment at a future time as its future value. If an investment of P dollars is compounded yearly at an interest rate of r as a...

Future value: Business and finance texts refer to the value of an investment at a future time as its future value. If an investment of P dollars is compounded yearly at an interest rate of r as a decimal, then the value of the investment after t years is given by

Future value = P × (1 + r)t .

In this formula, (1 + r)t is known as the future value interest factor, so the formula above can also be written

Future value = P × Future value interest factor . Financial officers normally calculate this (or look it up in a table) first.

a. What future value interest factor will make an investment double? Triple?

b. Say you have an investment that is compounded yearly at a rate of 9%. Find the future value interest factor for a 7-year investment.

c. Use the results from part b to calculate the 7- year future value if your initial investment is $5000.