Question

Flounder invested $235000 she received from her grandmother today in a fund that is expected to earn 10% per annum. To what amount should the investment grow in five years if interest is compounded semi-annually

Answer 1

The amount that should be growing is $407,223

Step-by-step explanation:

The computation of the amount that should be growing is shown below:

As we know that

Amount = P× (1 + r)^n

where,

P = $250,000

r = 10% ÷ 2 = 5%

n = 5 × 2 = 10 years

So, the amount is

= $250,000 × (1 + 0.05)^10

= $407,223

Hence the amount that should be growing is $407,223

We simply applied the above formula