You place $40,000 in an investment account today that earns 5% compounded semiannually. How much vill be in the account after (a) three years, (b) four years, or (c) five years? Formulas should include the =FV function and return a POSITIVE value. Initial investment Additional amount invested at the end of each semiannual period Interest rate Compounded semiannually Account balance at the end of: $40,000 $0 5% 2 Compounding periods per year a) Year 3 b) Year 4
You place $40,000 in an investment account today that earns 5% compounded semiannually. How much vill be in the account after (a) three years, (b) four years, or (c) five years? Formulas should include the =FV function and return a POSITIVE value. Initial investment Additional amount invested at the end of each semiannual period Interest rate Compounded semiannually Account balance at the end of: $40,000 $0 5% 2 Compounding periods per year a) Year 3 b) Year 4
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 16P
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Transcribed Image Text:1. You place $40,000 in an investment account today that earns 5% compounded semiannually. How much
will be in the account after (a) three years, (b) four years, or (c) five years?
Formulas should include the =FV function and return a POSITIVE value.
Initial investment
Additional amount invested at the end of each semiannual period
Interest rate
Compounded semiannually
Account balance at the end of:
$40,000
$0
5%
2 Compounding periods per year
a)
Year 3
b)
Year 4
c)
Year 5
2. If, in addition to the $40,000 original investment, you invest an additional $1,000 at the end of each
semiannual period, how much will be in the account after (a) three years, (b) four years, or (c) five years?
Formulas should include the =FV function and return a POSITIVE value.
Additional amount invested at the end of each semiannual period
Account balance at the end of:
$1,000
a)
Year 3
b)
Year 4
c)
Year 5
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