Question

FVIF (5%, 3yr)= a) 1.050 b) 1.158 c) 1.103 d) 1.216

Answer 1

Solution:

The answer is b. 1.158

Explanation:

The formula for Future Value Interest Factor (FVIF) = $(1+r)^{n}$

r = 5% or 0.05

n = 3 years

Input the figures in the FVIF formula:

FVIF = $(1+0.05)^{3} = 1.05^{3} = 1.1576$

FVIF = 1.158