Question

Anne Katz, the owner of Katz Sport Shop, loaned Shelley Slater $8,000 to help her open an art shop. Shelley plans to repay Anne at the end of eight years with interest compounded semiannually at 8%. At the end of eight years, Anne will receive Multiple Choice 0 $13,120 0 $14,484 0 0 $14.983.85

Answer 1

FV = PV (1+r)^n

FV = the amount which Anne will receive in the future (at the end of 8 years)
PV = present value (8000)
r = effective interest rate for the period = 0.08/2 = 0.04 (semi annually)
n = number of periods =8 x 2=16

FV = 8000(1.04)^16
FV = 14,983.84997
FV = 14,983.85

the amount which Anne will receive in the future (at the end of 8 years) = $14,983.85