Looking for reliable answers? Westonci.ca is the ultimate Q&A platform where experts share their knowledge on various topics. Discover detailed solutions to your questions from a wide network of experts on our comprehensive Q&A platform. Explore comprehensive solutions to your questions from knowledgeable professionals across various fields on our platform.
Sagot :
We have an investment that is compounded semi-anually.
The equation for the future value of an compounded interest investment is:
[tex]FV=PV(1+\frac{r}{m})^{n\cdot m}[/tex]where:
FV is the future value.
PV is the present or initial value of the investment (PV=100).
r is the annual nominal interest rate (r=5.5%=0.055).
m is the number of capitalization subperiods in the year. In this case, as it is semiannually, m=12/6=2.
n is the number of yearly periods that the investment last (n=6 years).
Then, we can replace the variables with the values and calculate:
[tex]\begin{gathered} FV=100\cdot(1+\frac{0.055}{2})^{2\cdot6} \\ FV=100\cdot(1+0.0275)^{12} \\ FV=100\cdot1.0275^{12} \\ FV\approx100\cdot1.3848 \\ FV\approx138.48 \end{gathered}[/tex]Answer: the value of the investment after 6 years is $138.48.
Thank you for visiting our platform. We hope you found the answers you were looking for. Come back anytime you need more information. We hope you found this helpful. Feel free to come back anytime for more accurate answers and updated information. We're glad you visited Westonci.ca. Return anytime for updated answers from our knowledgeable team.
