Question

Please adhere to the rounding instructions(in red) for calculations and final answer. If the answer is not exact, it will be incorrect. Thanks!

Question 2 0.5 pts What is the future value in 12 years of $604 invested in an account with a stated annual interest rate of 6.3%, compounded semi-annually? (Round answer to 2 decimal places. Do not round intermediate calculations). Topic: Discounted Cash Flow Valuation

Answer 1

Future value = principal (1+interest / number of time interest compounds)^{time *number of time interest compounds}

Future value = $604 (1+ 0.063 / 2)^12*2

Future value = $604 (1+0.0315)²⁴

Future value = $604 (1.0315)²⁴

Future value = $604 * 2.105046

Future value = $1271.45

Note:- Number of time interest compounds = 2 times (semi-annually interest)