Question

Good review to the person who helps.

1. A loan of $4,000 at 5% is compounded semiannually for 4 years. Find the future value and compound interest. Use the $1.00 future value table or the future value and compound interest formula.

Rate per period Periods 0.50% 1.00% 1.50% 2.00% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 2.50% 1 1.00500 1.01000 1.01500 1.02000 11.11042 1.23239 1.36706 1.51567 1.67958 1.86029 2.05943 2.27877 2.52024 2.78596 3.07823 21 1.11597 1.24472 1.38756 1.54598 1.1 Rate per period Periods 6.00% 6.50% 7.00% 7.50% 8.00% 8.50% 9.00% 9.50% 10.00% 11.00% 12.00% 1.06000 1.06500 1.07000 1.075021 3.39956 3.75268 4.14056 4.56644 5.03383 5.54657 6.10881 6.72507 7.40025 8.94917 10.80385 22 3.60354 3.99661 4.43040 4.9089

Answer: The future value of the loan is = $

The compound interest is = $

Answer 1

• future value: $4873.61
• interest: $873.61

Explanation:

Your table appears to be incomplete and not capable of answering this question. So, we'll use the future value formula:

FV = P(1 +r/n)^(nt)

for principal P, interest rate r, n compoundings per year for t years.

Here, we have P=$4000, r=0.05, n = 2, t = 4, so the future value is ...

FV = $4000(1.025^8) ≈ $4,873.61

__

This amount includes the original $4000 plus interest, so the interest is ...

$4,873.61 -4,000 = $873.61