Question

Please round off ONLY the final answer to maintain accuracy

You are going to save money for your son’s education. You have decided to place $1,639 every half year at the end of the period into a saving account earning 4.34 percent per year, compounded semi-annually for the next 8 years. How much money will be in the account at the end of that time period?

Round the answer to two decimal places.

Answer 1

Solution:

Half yearly investment = $1,639

Rate of interest = 4.34%

Nos of years = 8

Nos of period = 8*2 =16

Computation of future value of investment
Period	Opening Balance	Investment	Interest	Closing Balance
1	$0.00	$1,639.00	$0.00	$1,639.00
2	$1,639.00	$1,639.00	$35.57	$3,313.57
3	$3,313.57	$1,639.00	$71.90	$5,024.47
4	$5,024.47	$1,639.00	$109.03	$6,772.50
5	$6,772.50	$1,639.00	$146.96	$8,558.46
6	$8,558.46	$1,639.00	$185.72	$10,383.18
7	$10,383.18	$1,639.00	$225.32	$12,247.50
8	$12,247.50	$1,639.00	$265.77	$14,152.27
9	$14,152.27	$1,639.00	$307.10	$16,098.37
10	$16,098.37	$1,639.00	$349.33	$18,086.71
11	$18,086.71	$1,639.00	$392.48	$20,118.19
12	$20,118.19	$1,639.00	$436.56	$22,193.75
13	$22,193.75	$1,639.00	$481.60	$24,314.36
14	$24,314.36	$1,639.00	$527.62	$26,480.98
15	$26,480.98	$1,639.00	$574.64	$28,694.62
16	$28,694.62	$1,639.00	$622.67	$30,956.29

Therefore at the end of period, money will be $30,956.29 in the account.