Deposits of $1000 are made at the end of every half year into a fund earning interest at j₁ = 10%.The fund credits simple interest for any fractional part of an interest period.How much is in the fund at the end of 10 years?

Question

Quizplus · Accepted Answer

First, we need to find the total number of deposits made in 10 years, which is 10 years x 2 = 20 half years.

Next, we need to use the formula for the future value of an annuity:

FV = PMT x (((1 + r)^n - 1) / r)

Where:
PMT = deposit amount = $1000
r = interest rate per half year = 0.10 / 2 = 0.05
n = number of deposits = 20

Plugging in the numbers, we get:

FV = $1000 x (((1 + 0.05)^20 - 1) / 0.05)
FV = $32,671.72

Therefore, the correct answer is (C) $32,671.72.

Deposits of $1000 Are Made at the End of Every