12. A firm has $1,000,000 to invest in a security that offers a 3% return compounded...

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Question

12. A firm has $1,000,000 to invest in a security that offers a 3% return compounded semi- annually for 3 years. What is the

business finance

Answer 1

Answer #1

We use the formula:
A=P(1+r/2)^2n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=1,000,000*(1+0.03/2)^(2*3)

=1,000,000*1.09344326

Hence future value factor=1.0934(Approx)

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Answer 2

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