The future value of $200 received today and deposited for three years in an account which pays semiannual interest of 8 percent is ________.
A) $253.00
B) $252.00
C) $158.00
D) $134.66

Question

Quizplus · Accepted Answer

The future value (FV) of an investment is calculated using the formula FV = PV(1 + r/n)^(nt), where PV is the present value of the investment, r is the annual interest rate, n is the number of compounding periods per year, and t is the time in years. Here, PV = $200, r = 8% or 0.08, n = 2 (since interest is compounded semiannually), and t = 3 years. Plugging these values into the formula gives FV = $200(1 + 0.08/2)^(2*3) = $200(1.04)^6 ≈ $253.00.

The Future Value of $200 Received Today and Deposited for Three