What is the future value of $20,000 received in 10 years if it is invested at 6% compounded annually for the next six years and 5%, compounded semi-annually for the remaining four years?
A) $25,000
B) $31,000
C) $32,772
D) $34,567
E) $38,817

Question

Quizplus · Accepted Answer

The future value of $20,000 received in 10 years if it is invested at 6% compounded annually for the next six years and 5%, compounded semi-annually for the remaining four years is $34,567.The future value of the investment at the end of six years is $20,000 * (1 + 0.06)^6 = $26,243.20.The future value of the investment at the end of four years is $26,243.20 * (1 + 0.05/2)^8 = $34,567.00.

What Is the Future Value of $20,000 Received in 10