a business person invests $3,620 at 1% compounded semiannually for two years. What is the future...
a business person invests $3,620 at 1% compounded semiannually for two years. What is the future value of the investment, and how much interest will they earn over the two year period?
Homework Answers
| A | B | C | D | E | F | G |
| 2 | ||||||
| 3 | Amount invested | $3,620 | ||||
| 4 | Interest rate | 1% | ||||
| 5 | Period | 2 | Years | |||
| 6 | Compounding | Semi-annual | ||||
| 7 | ||||||
| 8 | Semi-annual interest rate | 0.50% | =D4/2 | |||
| 9 | Semi-annual Period | 4 | =D5*2 | |||
| 10 | ||||||
| 11 | Future Value | =$3650*(1+0.50%)4 | ||||
| 12 | $3,692.94 | =D3*((1+D8)^D9) | ||||
| 13 | ||||||
| 14 | Hence the future value is | $3,692.94 | ||||
| 15 | ||||||
| 16 | Interest earned | =Future Value - Amount Invested | ||||
| 17 | =$3692.94 - $3620 | |||||
| 18 | $72.94 | =D14-D3 | ||||
| 19 | ||||||
| 20 | Hence interest earned is | $72.94 | ||||
| 21 | ||||||
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