Assume Quinn invests $18,500 today at the annual rate of 6%. Assuming the interest rate compounds...

Question

Question

Answer 1

Answer #1

Amount invest today PV = $18500

a). Annual rate = 6% compounded semiannually,

years on investment = 10 years.

So, final value of this investment is calculated using formula

FV = Pv*(1+r/n)^(n*t)

=> FV = 18500*(1 + 0.06/2)^(2*10) = $33413.06

Option c is correct.

b). When interest rate is compounded monthly, n = 12

So, FV = 18500*(1 + 0.06/12)^(12*10) = $33658.84

So, option d is correct.

Answer 2

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