Angie invested $150,000 she received from her grandmother today in a fund that is expected to earn 10% per annum. To what amount should the investment grow in five years if interest is compounded semi-annually?

Question

Quizplus · Accepted Answer

Firstly, we need to find out the semi-annual interest rate:
i = (10%/2) = 0.05
Next, we need to find out the number of compounding periods:
n = 5 years x 2 = 10 semi-annual periods
Now, we can use the formula for compound interest:
A = P (1 + r/n)^(n*t)
A = 150,000 (1 + 0.05/2)^(2*10)
A = $244,335 (rounded to the nearest dollar)
Therefore, the answer is (C) $244,335.

Angie Invested $150,000 She Received from Her Grandmother Today in a Fund