Question

FV of $600 each 6 months for 5 years at a nominal rate of 12%, compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cen

Answer 1

Amount after 5 year will be $1074.5

Step-by-step explanation:

We have given principal amount P = $600

Time t = 5 year

Rate of interest r = 12%

It is given that amount is compounded semiannually

So time period = 5×2 = 10 period

And rate of interest semiannually will be
`=(12)/(2)=6` %

We have to find future value after 5 year

Future value is given by
`A=P(1+(r)/(100))^n`

So
`A=600* (1+(6)/(100))^(10)`

`=600*1.06^(10)`

`=600*1.79=1074.5`

So amount after 5 year will be $1074.5