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find the account balance after 20 years if 100$ is placed in an account that pays 1.2 % interest compounded twice a month |
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Answer» Answer: Find the account balance after 20 years if $100 is invested in the account that pays 1.2% interest compounded bi monthly
This is a SINGLE investment that accumulates interest. The formula is
Future Value = Present Value *(1+ r/t)^nt, where r is the annual interest rate t is the time period (in this case 24 periods per year, and n is the NUMBER of years.
FV = $100*(1..005)^480 FV =$127.12
Alternatively: Find the account balance after 20 years if $100 is invested by-monthly in the account that pays 1.2% interest compounded bi monthly.
Now we have an ordinary annuity, whose formula is more complicated, but the problem can be SOLVED with a spreadsheet function of a FINANCIAL calculator. The variables are
FV = ? PV = 0 PMT = 100 N = 480 i% = .05%
FV = $54,234.58 |
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