Question

Find the future value of an ordinary annuity that calls for depositing $100 at the end of every 6 months for 5 years into an account that earns 11% interest compounded semiannually.

Answer 1

please help me thank you :)

Answer 2

r = 11/2 = 5.5
Total = {100 * [(1+.055)^11 -1]/.055} -100
1,358.35

I'll work that out just to make sure that really is the correct answer
Look at the attachment for the formula.

Answer 3

Calculating it for 10 six-month periods + 9 six-month periods + 8 six-month periods, etc totals to
1,369.97 which is slightly higher than 1,358.35
One thing different between the two was that I used 11% compounded semi-annually which = 11.3025 annually.

Answer 4

Using 11% compounded semi-annually gives a semi-annual rate of 11.3025/2 = 5.51625.

Total = {100 * [(1+.0551625)^11 -1]/.0551625} -100
Total = {805.1480644 / .0551625} -100
= 1,359.59

I recalculated the 10 semi-annual periods of interest and they total
1,359.59

Pretty good huh?

Answer 5

thank you so much :)