Question

1.

Answer 1

To solve this we are going to use the future value of annuity ordinary formula: $FV=P[ \frac{(1+ \frac{r}{n} )^{kt} -1}{ \frac{r}{n} } ]$
where
$FV$ is the future value
$P$ is the periodic payment
$r$ is the interest rate in decimal form
$n$ is the number of times the interest is compounded per year
$k$ is the number of payments per year
$t$ is the number of years

We know for our problem that $P=6200$ and $t=5$. To convert the interest rate to decimal form, we are going to divide the rate by 100%:
$r= \frac{6}{100} =0.06$
Since the deposit is made semiannually, it is made 2 times per year, so $k=2$.
Since the type of the annuity is ordinary, payments are made at the end of each period, and we know that we have 2 periods, so $n=2$.
Lets replace the values in our formula:

$FV=P[ \frac{(1+ \frac{r}{n} )^{kt} -1}{ \frac{r}{n} } ]$
$FV=6200[ \frac{(1+ \frac{0.06}{2} )^{(2)(5)} -1}{ \frac{0.06}{2} } ]$
$FV=71076.06$

We can conclude that the correct answer is $71,076.06