Dover Company deposits $50,000 with Second National Bank in an account earning interest at 8% per annum,compounded semi-annually.How much will Dover have in the account after five years if interest is reinvested?

Question

Quizplus · Accepted Answer

The future value of the investment can be calculated using the formula for compound interest: FV = P(1 + r/n)^(nt), where P is the principal amount ($50,000), r is the annual interest rate (0.08), n is the number of times interest is compounded per year (2), and t is the number of years (5). Plugging in the values, FV = 50000(1 + 0.08/2)^(2*5) = 50000(1.04)^10 = $74,012.

Dover Company Deposits $50,000 with Second National Bank in an Account