You can invest in a bank account that has an APR of 8%. You want to...
You can invest in a bank account that has an APR of 8%. You want to make equal deposits every semester (six months) of $500 for the next 5 years. How much will you have accumulated at the end of the 5 years?
A. $14, 889.04
B. 6,003.05
C. $7,243.28
D, $6,795.16
Homework Answers
Future value of Annuity = A [((1+r)n-1) / r]
Where
A - Annuity payment = 500
r - rate per period = .08/2 = .04
n - no. of periods = 5*2 = 10
Future value of Annuity = 500* [(1.04^10-1) / .04]
= 500* [(1.48024428492-1) / .04]
= 500*12.006107123
= 6003.05
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