Question

Your bank pays 5.00 percent annual interest compounded semiannually on your savings account. You don’t expect to add to the current balance of $2,900 over the next four years. How much money can you expect to have at the end of this period?

Answer 1

Answer:

$3,533.37

Explanation:

In this question, we use the Future value formula which is shown below:

Future value = Present value × (1 + rate)^number of years

where,

Present value = $2,900

Rate = 5.00% ÷ 2 = 2.5%

Number of years = 4 year × 2 = 8 years

So, the future value

= $2,900 × (1 + 2.5%)^8

= $2,900 × 1.2184028975

= $3,533.37

Hence, the future value is $3,533.37 or the money that is to be expected at the end of this period