Question

The future value of $200 received today and deposited at 8 percent compounded semiannually for three years is ________. $380 $158 $253 $252

Answer 1

The correct answer is $253

Answer 2

$253

Step-by-step explanation:

In order to solve this you just have to use the formula to calculate the future insterests:

`A=P(1+(r)/(n))^(nt)`

A= Amount or future value

P=Principal

R=Interest rate in decimals

N= Number of compounds by unit, or year

T= Time in years

So we know that the interest is 8% that is 0.08 in decimal, and since it is compounded semiannually that´s two times a year for three years, we just insert that into the formula:

`A=P(1+(r)/(n))^(nt)\\A=200(1+(.08)/(2))^(2*3)\\ A=200(1.04)^6\\a=200(1.2653)\\A=253.06`

So the future value of the $200 account will be $253.06 after three years.