Question

Suppose you invest $34,600 into a savings account with a 11.25% annual interest rate

that compounds interest semi-annually. Use the TVM solver on your calculator to find the
future value of the account after ten years.

Answer 1

$103,373.81

Explanation:

The calculation of the future value is shown below:

As we know that

Future value = Present value × (1 + rate of interest)^number of years

where,

rate of interest = 11.25% ÷ 2 = 5.625%

And, the number of years is = 2 × 10 = 20

Therefore, the future value is

= $34,600 × (1 + 5.625%)^20

= $34,600 × 2.987682472

= $103,373.81