Assume that you can invest to earn a stated annual rate of return of 12 percent, but where interest is compounded semi-annually. If you make 20 consecutive semi-annual deposits of $500 each, with the first deposit being made today, what will your balance be at the end of Year 20? Group of answer choices $52,821.19 $57,900.83 $58,988.19 $62,527.47 $64,131.50
Assume that you can invest to earn a stated annual rate of return of 12 percent, but where interest is compounded semi-annually. If you make 20 consecutive semi-annual deposits of $500 each, with the first deposit being made today, what will your balance be at the end of Year 20? Group of answer choices $52,821.19 $57,900.83 $58,988.19 $62,527.47 $64,131.50
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
|
Assume that you can invest to earn a stated annual |
Group of answer choices
$52,821.19
$57,900.83
$58,988.19
$62,527.47
$64,131.50
Expert Solution
Step 1
Based on the given information,
The semi-annual interest rate = 6%
Time period = 20
Amount = $500
We have to find the FV of the annuity due since the first deposit is made today
Using the FVIFA table, the FVIFA factor for 6% and 20 periods is 36.7856
The FV amount is 500 x 36.7856 = 18,392.8
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