The future value of a $500 investment today at 10% annual interest compounded semiannually for five years is ______.
A)$805
B)$814
C)$750
D)$923

Question

Quizplus · Accepted Answer

Using the formula for compound interest, we have:

Future Value = P*(1 + r/n)^(n*t)
where P is the principal (initial investment), r is the annual interest rate, n is the number of times the interest is compounded per year, and t is the time period in years.

Plugging in the given values, we get:

Future Value = 500*(1 + 0.1/2)^(2*5)
Future Value = $814.45

Therefore, the closest answer choice is B, $814.

The Future Value of a $500 Investment Today at 10