your bank pay 5 percent annual interest compounded semianually on your savings account. you dont expect...
your bank pay 5 percent annual interest compounded semianually on your savings account. you dont expect to add to the current balance of $2,700 over the next four year. how much money can you expect to have at the end of this period?
Homework Answers
This question requires application of basic time value of money function, according to which:
FV = PV * (1 + r)n
PV = $2,700
r = 5%/2 = 2.5% (semi-annually)
n = 4 * 2 = 8 semi-annual periods
FV = $2,700 * (1 + 2.5%)8
FV = $2,700 * 1.2184
FV = $3,289.69
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