63.4k views
0 votes
What is the value today of $6,500 that is due in 414

years if the interest rate is 3.96% compounded semi-annually?

1 Answer

6 votes

Answer:

approximately $4,609,968.67

Explanation:

To calculate the future value of a lump sum after compounding over a certain number of years with a specific interest rate, you can use the formula:

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

Where:

FV is the future value

PV is the present value (6500)

r is the annual interest rate (3.96%)

n is the number of times compounded per year (semi-annually, so 2)

t is the number of years (414)

Plugging in the values, you get:

FV = 6500 * (1 + 0.0396 / 2)^(2 * 414)

The future value of $6,500 in 414 years at an interest rate of 3.96% compounded semi-annually is approximately $4,609,968.67.

User Tslater
by
8.0k points