A principal of $200 is invested at 5% interest rate annually. Determine the future value in 3 months' time if compounded:
(a) Semi-annually
(b) Quarterly
4 answers
semi annually future value is $201.20
just use your formula. For quarterly, that is
200(1+.05/4)^(4*1/4) = 202.5
200(1+.05/4)^(4*1/4) = 202.5
for semi-annually ....
amount = 200( 1.025)^(1/2) = 202.48 , not 201.20
amount = 200( 1.025)^(1/2) = 202.48 , not 201.20
5% compounded annually
1 answer