To calculate the future value of the investment after 33 years, we can use the formula for compound interest:
A = P (1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the principal amount ($1600)
r = the annual interest rate (7% or 0.07)
n = the number of times interest is compounded per year (2 for semi-annual compound)
t = the number of years (33)
Plugging in the values:
A = 1600 (1 + 0.07/2)^(2*33)
A = 1600 (1 + 0.035)^(66)
Calculating:
A ≈ 1600 (1.035)^66
A ≈ 1600 (4.321)
Multiplying the remaining values:
A ≈ 6913.60
So, after 33 years, the investment would have a future value of approximately $6,913.60.
$1600 principal earning 7%, compound semi annually, after 33 years
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