Question

It is now January 1. You plan to make a total of 5 deposits of $150 each, one every 6 months, with the first payment being made today. The bank pays a nominal interest rate of 4% but uses semiannual compounding. You plan to leave the money in the bank for 10 years. How much will be in your account after 10 years?

$1,394.77

$1,071.60

$1,277.94

$1,521.70

$1,170.46

Answer 1

Notes:	Calculation of Half Yearly interest Rate
	Annual Rate =		4%
	Half yearly Rate = 4% / 2 =	2%
	Total Time =		10 Years
	Total Period = 10 years X 2 =	20 Periods
Solution:
	Calculation of Future value of investment with interest rate of 2 %
	Period	Deposite	Interest Rate @ 2 %	Cumulative amount
	1	$                           150	$                                           3.00	$               153.00
	2	$                           150	$                                           6.06	$               309.06
	3	$                           150	$                                           9.18	$               468.24
	4	$                           150	$                                        12.36	$               630.61
	5	$                           150	$                                        15.61	$               796.22
	6		$                                        15.92	$               812.14
	7		$                                        16.24	$               828.39
	8		$                                        16.57	$               844.95
	9		$                                        16.90	$               861.85
	10		$                                        17.24	$               879.09
	11		$                                        17.58	$               896.67
	12		$                                        17.93	$               914.60
	13		$                                        18.29	$               932.90
	14		$                                        18.66	$               951.55
	15		$                                        19.03	$               970.59
	16		$                                        19.41	$               990.00
	17		$                                        19.80	$           1,009.80
	18		$                                        20.20	$           1,029.99
	19		$                                        20.60	$           1,050.59
	20		$                                        21.01	$           1,071.60
	Answer = Option 2 = $ 1071.60