How much interest will you earn on a $792 deposit at 6% compound semiannually if you...

Question

Question

How much interest will you earn on a $792 deposit at 6% compound semiannually if you deposit for 7 years?

Answer 1

Answer #1

This question requires application of basic time value of money function, according to which FV = PV * (1 + r) where FV is F

r = 6%/2 = 3% (semi-annually), n = 7 * 2 = 14 semi-annual periods

FV = $792 * (1 + 0.03)¹⁴

FV = $792 * 1.51

FV = $1,197.97

Interest = $1,197.97 - $792 = $405.97

Add a comment

Answer 2

Similar Homework Help Questions

How much money must you deposit at 6% interest compounded semiannually in order to earn $913.50...

How much money must you deposit at 6% interest compounded semiannually in order to earn $913.50 interest in one year? A deposit of $1 is needed to earn $913.50 in one year at 6% compounded semiannually. (Round to the nearest dollar.)
suructions You deposit 84,900 in an account earning 3% interest compounded semiannually. How much will you...

suructions You deposit 84,900 in an account earning 3% interest compounded semiannually. How much will you have in the account after 7 years? (Note: Use n = 12 for monthly compounding, n = 4 for quarterly compounding, n = 2 for semiannual compounding, and n = 1 for annual compounding.) $ Points possible: 4 This is attempt 1 of 2.
You are planning to deposit $100 in an account earning 6% interest rate. a. How much...

You are planning to deposit $100 in an account earning 6% interest rate. a. How much money do you have at the end of three years if interest is compounded annually? b. How much money do you have at the end of three years if interest is compounded semiannually? c. How much money do you have at the end of three years if interest is compounded quarterly? d. How much money do you have at the end of three years...

You can earn $58 in interest on a $1,000 deposit for eight months. If the EAR is the same regardless of the length of the investment, how much interest will you earn on a $1,000 deposit for: a. 9 months. b. 1 year. c. 1.5 years.

You can earn $58 in interest on a $1,000 deposit for eight months. If the EAR is the same regardless of the length of the investment, how much interest will you earn on a $1,000 deposit for:a. 9 months.b. 1 year.c. 1.5 years.
How much must you deposit today if you can earn 2.40% annual rate of interest (with...

How much must you deposit today if you can earn 2.40% annual rate of interest (with monthly compounding) in order to have $42,000 seven years from now? Please show ALL work with finance formulas.
Assume that you deposit $1,000 at a compound interest rate of 8% for 2 years. How...

Assume that you deposit $1,000 at a compound interest rate of 8% for 2 years. How much additional interest will you earn as compared to receiving simple interest for the same time period? O $6.40 $16.64 $86.40 O Cannot determine from the information given.

37. You can earn 8 percent interest, compounded monthly. How much must you deposit today to...

37. You can earn 8 percent interest, compounded monthly. How much must you deposit today to withdraw $10,000 in 6 years? 38. If you invest $10,000 in an account expected to earn 5.0% compounded annually, how long do you need to invest for the account to have grown to $40,000? 42. A bank is offering a CD which it will sell to its customers for $10,000 paying them back $14,000 in 4 years. What annual rate of return will a...
You can earn $45 in interest on a $1,000 deposit for eight months. If the EAR...

You can earn $45 in interest on a $1,000 deposit for eight months. If the EAR is the same regardless of the length of the investment, how much interest will you earn on a $1,000 deposit for: a. 5 months. b. 1 year. c. 1.2 years.
You deposit $1,000 today into an account that pays 3 percent annual compound interest. How much...

You deposit $1,000 today into an account that pays 3 percent annual compound interest. How much money will you have in your account in 5 years? None of these are correct. $1,338 0 $1,159 O $1,276 $1,217

Interest-on-Interest Consider a $3,100 deposit earning 7 percent interest per year for 6 years. How much...

Interest-on-Interest Consider a $3,100 deposit earning 7 percent interest per year for 6 years. How much total interest is earned on the original deposit (excluding interest earned on interest)?