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Jones can deposit $5,000 at the end of each six-month period for the next 12 years and earn interest at an annual rate of 8 percent, compounded semiannually. What will the value of the investment be after 12 years? If the deposits were made at the beginning of each year, what would the value of the investment be after 12 years?

Respuesta :

letmeanswer

Step-by-step explanation:

Given,

Jones can deposit $5,000 at the end of each six-month cycle for the next 12 years.

Return at an average pace of 8%

Now,

               PV                                              0                  0

              PMT                                         -5000        -5000

                N                                              24               24

                IR                                              4%              4%

               FV                                   $195,413.02    $203,229.54

Semiannual means twice a year.

Value of the investment after 12 years will be $ 12816.5

Since, interest is compounded semiannually.

So, number of half yearly in 12 years, n = 24

Rate per half yearly, r = 8/2 = 4 %

Principal amount (P)= $5000

We know that ,

                    [tex]A=P(1+\frac{r}{100} )^{n}\\\\A=5000(1+\frac{4}{100} )^{24}\\\\Amount=12816.5[/tex]$

Therefore, Value of the investment after 12 years will be $ 12816.5

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