Please help!!! If Jimmy invests $250 twice a year at 4% compounded semi-annually, how much will his investment be worth after 3

Question

Please help!!!

If Jimmy invests $250 twice a year at 4% compounded semi-annually, how much will his investment be worth after 3 years?

Please give a step by step!

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Vivian 7 months 2021-10-25T19:47:56+00:00 1 Answer 0 views 0

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    2021-10-25T19:49:50+00:00

    Answer: his investment will be worth $1606.5 after 3 years

    Step-by-step explanation:

    We would apply the formula for determining future value involving deposits at constant intervals. It is expressed as

    S = R[{(1 + r)^n – 1)}/r][1 + r]

    Where

    S represents the future value of the investment.

    R represents the regular payments made(could be weekly, monthly)

    r = represents interest rate/number of interval payments.

    n represents the total number of payments made.

    From the information given,

    R = $250

    r = 0.04/2 = 0.002

    n = 2 × 3 = 6

    Therefore,

    S = 250[{(1 + 0.02)^6 – 1)}/0.02][1 + 0.02]

    S = 250[{(1.02)^6 – 1)}/0.02][1.02]

    S = 250[{(1.126 – 1)}/0.02][1.02]

    S = 250[{0.126}/0.02][1.02]

    S = 250[6.3][1.02]

    S = 250 × 6.426

    S = $1606.5

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