Question & Answer: Future Value or Compound Amount of​ $1.00…..

Table
Future Value or Compound Amount of​ $1.00
Rate per period
Periods ​1% ​1.5% ​2% ​2.5% ​3% ​4% ​5% ​6% ​8%
1 1.01000 1.01500 1.02000 1.02500 1.03000 1.04000 1.05000 1.06000 1.08000
2 1.02010 1.03023 1.04040 1.05063 1.06090 1.08160 1.10250 1.12360 1.16640
3 1.03030 1.04568 1.06121 1.07689 1.09273 1.12486 1.15763 1.19102 1.25971
4 1.04060 1.06136 1.08243 1.10381 1.12551 1.16986 1.21551 1.26248 1.36049
5 1.05101 1.07728 1.10408 1.13141 1.15927 1.21665 1.27628 1.33823 1.46933
Table shows future value​ (FV) of​ $1.00 compounded for N periods at R rate per period.
Table values can be generated using the formulaFV equals $ 1 left parenthesis 1 plus Upper R right parenthesis Superscript Upper N

.Find the future value and compound interest on ​$6,000 at 4​% compounded semiannually for two years. Use the Future Value or Compound Amount of​ $1.00 Table or the future value and compound interest formula.

Expert Answer

 

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Formula, FV = PV (i+i/m)m*n

PV= 6,000, i= 4%= 0.04, m= 2(Numbers of times compounding is done in a year), n= Number of years

So,

FV = 6,000 + (1+0.04/2)2*2

=6,494.59

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