If a payment received two years from now has a present value of $200 and the annual interest rate on the payment is 5 percent, then the future value of the payment is:

$220.50

Explanation:

The formula to compute the future value is shown below:

As we know that

Future value = Present value × (1 + interest rate)^number of years

where,

Present value = $200

Interest Rate = 5%

Number of years =  2 years

So, the future value

= $200 × (1 + 0.05)^2

= $200 × 1.1025

= $220.50

We simply applied the above formula so that the future value could come

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