Question

A deposit of $2,630 is placed into a retirement fund at the beginning of every 6 months for 11 years. The fund earns 3% annual interest, compounded biannually and paid at the end of the 6 months. How much is in the account right after the last deposit? Round your answer to the nearest dollar.

Answer 1

FV= $67,952.83

Explanation:

Giving the following information:

Semiannual deposit= $2,630

Number of periods= 11*2= 22 - 1= 21

Interest rate= 0.03/2= 0.015

We need to determine the future value at the last deposit. We will use the following formula:

FV= {A*[(1+i)^n-1]}/i + {[A*(1+i)^n]-A}

A= semiannual deposit

FV= {2,630*[(1.015^21) - 1]} / 0.015 + {[2,630*(1.015^21)] - 2,630} + 2,630

FV= 64,357.47 + 965.36 + 2,630

FV= $67,952.83