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Accounting
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$1200 is deposited today into an account paying 6% interest compounded semiannually. How much will have been earned after 25 years?

Jun 10th, 2015

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Jun 10th, 2015

Present Value (PV)= $1200
Interest (r)= 6% compounded semiannually
Number of periods(n)= 25 years  
Because the interest is compounded semiannually, we convert 25 years to 50 semiannual periods, and the annual interest rate of 6% to the semiannual rate of 3%.
FV= PV * (1+r)^n                           FVIF for n=50 and r =3 %
FV=$1200*(1.03)^50  
Fv=1200(4.384)  
Fv = $5260.8  

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