Question

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Calculate the balance you would have in an account after 4 years assuming $3,000 was deposited...

Calculate the balance you would have in an account after 4 years assuming $3,000 was deposited today at 16% per year compounded semiannually and quarterly. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.

a $5,553 (semiannually) and $5,619 (quarterly) b $5,553 (semiannually) and $5,432 (quarterly) c $5,432 (semiannually) and $5,619 (quarterly) d $10,864 (semiannually) and $11,106 (quarterly) e $11,106 (semiannually) and $11,238 (quarterly)

Solutions

Expert Solution

1.Information provided:

Present value= $3,000

Time= 4 years*2 = 8 semi-annual periods

Interest rate= 16%/2 = 8% per semi-annual period

The question is solved by computing the future value.

Enter the below in a financial calculator to compute the future value:

PV= -3,000

N= 8

I/Y= 8

Press the CPT key and FV to compute the future value.

The value obtained is 5,552.79.

Therefore, the future value is $5,553.

2.Information provided:

Present value= $3,000

Time= 4 years*4 = 16 quarters

Interest rate= 16%/4 = 4% per quarter

The question is solved by computing the future value.

Enter the below in a financial calculator to compute the future value:

PV= -3,000

N= 16

I/Y= 4

Press the CPT key and FV to compute the future value.

The value obtained is 5,618.94.

Therefore, the future value is $5,619.

Hence, the answer is option a.

jeff jeffy answered 2 years ago
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