Question

You invest $1,900 at 4% and it's compounded semi-annually (twice a year) for 3 years. How much will your $1,900 be worth in 3 years?

Answer 1

FV= $2,139.71

Explanation:

Giving the following information:

You invest $1,900 at 4% and it's compounded semi-annually (twice a year) for 3 years.

First, we need to calculate the semiannual interest rate:

Semmi-annual interest rate= 0.04 / 2= 0.02

To calculate the future value, we need to use the following formula:

FV= PV*(1 + i)^n

PV= $1,900

i= 0.02

n= 2*3= 6 semesters

FV= 1,900*(1.02^6)

FV= $2,139.71