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What is the future value of $2,000 in 20 years assuming an interest rate of 7.3 percent compounded semiannually?
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What is the future value of $2,000 in 20 years assuming an interest rate of 7.3 percent compounded semiannually?

User Sergio Prats
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1 Answer

7 votes
Principal, P = $2,000
Duration, t = 20 years
Rate, r = 7.3% = 0.073
Compounding interval, n = 2 (semiannual)

The future value is

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

1 + r/n = 1 + 0.073/2 = 1.0365
nt = 2*20 = 40
Therefore
A = 2000*1.0365⁴⁰ = 8390.78

Answer: $8,390.78

User Kelly Larsen
by
8.7k points
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