Present Value of 1 Future Value of 1 Present Value of an Annuity of 1 Future Value of an Annuity of 1 Jessica received a gift of $7,500 at the time of her high school graduation. She invests it in an account that yields 10% compounded semi-annually. What will the value of Jessica's investment be at the end of 5 years?
A)$8,250.00
B)$11,250.00
C)$12,216.75
D)$9,375.00
E)$10,500.00

Question

Present Value of 1  Future Value of 1  Present Value of an Annuity of 1  Future Value of an Annuity of 1  Jessica received a gift of $7,500 at the time of her high school graduation. She invests it in an account that yields 10% compounded semi-annually. What will the value of Jessica's investment be at the end of 5 years?
A)$8,250.00 
B)$11,250.00 
C)$12,216.75 
D)$9,375.00 
E)$10,500.00

Quizplus · Accepted Answer

We can use the formula for compound interest:

A = P(1 + r/n)^(nt)

where
A = final amount
P = principal (initial amount)
r = annual interest rate
n = number of times the interest is compounded per year
t = time (in years)

In this case, P = $7,500, r = 10%, n = 2 (since the interest is compounded semi-annually), and t = 5.

So,

A = $7,500(1 + 0.10/2)^(2*5) = $12,216.75

Therefore, the answer is (C)$12,216.75.