Question

A student desired to invest $1,540 into an investment at 9% compounded semiannually for 6 years. With all else equal, what is the future value of this initial investment after the six year period

Answer 1

Answer:

The future value of this initial investment after the six year period is $2611.6552

Step-by-step explanation:

Consider the provided information.

A student desired to invest $1,540 into an investment at 9% compounded semiannually for 6 years.

Future value of an investment: $FV=P(1+r)^n$

Where Fv is the future value, p is the present value, r is the rate and n is the number of compounding periods.

9% compounded semiannually for 6 years.

Therefore, the value of r is: $r=\frac{0.09}{2}=0.045$

Number of periods are: 2 × 6 = 12

Now substitute the respective values in the above formula.

$FV=1540(1+0.045)^{12}$

$FV=1540(1.045)^{12}$

$FV=1540(1.69588)$

$FV=2611.6552$

Hence, the future value of this initial investment after the six year period is $2611.6552