Question

20,000 has been placed in a bank account that earns 5.7% interest. How much money will be in the account if it is compounded semi annually for 3 years

Answer 1

$25 821.69

Explanation:

The formula for the future value (FV) of an investment is

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

FV = 20 000(1 + 0.087/2)^(2×3)

FV = 20 000(1 + 0.0435)⁶

FV = 20 000(1.0435)⁶

FV = 20 000 × 1.291 0847

FV = $25 821.69