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

Question

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

1. 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