Salem plans to deposit $2200 every 6 months for 15 years to save for his son's higher education. The rate of return will be 4% compounded semi-annually for the first 5 years and 8% compounded semi-annually for the subsequent 10 years. Calculate the future value of this simple annuity.
A) $24 089.39
B) $52 782.81
C) $53 454.21
D) $106 237.02
E) $118 293.81

Question

Quizplus · Accepted Answer

The future value of the annuity is calculated in two parts due to the change in interest rate. For the first 5 years, the future value is calculated using 4% compounded semi-annually, and for the next 10 years, 8% compounded semi-annually. The total future value is the sum of these two calculations, resulting in $118,293.81.

Salem Plans to Deposit $2200 Every 6 Months for 15