Question

Juan invested $8700 at 11% to be compounded semi-annually. What will be the value of Juan's investment in 2 years? Round your answer to the nearest cent. Note: Assume 365 days in a year and 30 days in a month.

a. $10,108.38
b. $9,987.65
c. $10,240.99
d. $10,375.50

Answer 1

The value of Juan's investment in 2 years will be $10,375.50 (Option d).

Step-by-step explanation:

To calculate the future value of Juan's investment after 2 years with semi-annual compounding, we use the compound interest formula:

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

Where:

A is the future value.

P is the principal amount ($8,700).

r is the annual interest rate (0.11).

n is the number of times interest is compounded per year (2 for semi-annual).

t is the time in years (2).

Plugging in the values:

A = 8700 * (1 + 0.055)^4

A = 8700 * 1.2321

The future value A is approximately $10,375.50.

Therefore, the value of Juan's investment in 2 years is approximately $10,375.50.