I have been trying to answer this question but I do not know what specific formula to use or how to derive from a formula to get the answer. I am clueless about this problem. Any help is appreciated. Thank you
Sara decides to set up a retirement fund by depositing $1,500 at the end of each month for 40 years. how much she will have then, if the interest rate is 8% compounded semiannually?
a. 5,043,260.97
b. 5,100,098.97
c. 5,908,080.97
d. none
Sara decides to set up a retirement fund by depositing $1,500 at the end of each month for 40 years. how much she will have then, if the interest rate is 8% compounded semiannually?
a. 5,043,260.97
b. 5,100,098.97
c. 5,908,080.97
d. none
-
8/2=4% interest rate is the effective rate for 6 months
(1.04)=(1+x)^6 This is to find the effective monthly rate.
x=.0065581969
[1500((1.0065581969)^480-1)]/[1.0065581…
5043260.96
(1.04)=(1+x)^6 This is to find the effective monthly rate.
x=.0065581969
[1500((1.0065581969)^480-1)]/[1.0065581…
5043260.96
-
FV = 1500*(1+0.8e-1*(1/2))^80
FV = $34,574.70
FV = $34,574.70