You choose to invest your $3,560 income tax refund check (rather than spend it!) in an account earning 5% compounded semiannually. How much will the account be worth in 5 years?

Answer 1

P = Po(1+r)^n.

Po = $3500.

r = 0.05/2 = 0.025.

n = 2Comp./yr. * 5yrs. = 10 Compounding periods.

P = ?.