You start to save for a major purchase. You can invest $500 every 3 months for 10years.
You are able to earn 8% compounded semi-annually. What is the amount of interest that you
earn during the entire term?
I believe the formula is Future Value of a simply annuity due.
FVn(due)=PMT[(1+i)^n-1/i](1+i)
500[(1.040^40-1/.040/(1.04) pmt=500 i=.04 n=10(4)
(95.02551570)(1.04)
(47512.75785)(1.04)
49413.27
40X500=20,000 so 49413.27-20,000=29413.27
Could someone please tell me where I made mistake........thanks
You are able to earn 8% compounded semi-annually. What is the amount of interest that you
earn during the entire term?
I believe the formula is Future Value of a simply annuity due.
FVn(due)=PMT[(1+i)^n-1/i](1+i)
500[(1.040^40-1/.040/(1.04) pmt=500 i=.04 n=10(4)
(95.02551570)(1.04)
(47512.75785)(1.04)
49413.27
40X500=20,000 so 49413.27-20,000=29413.27
Could someone please tell me where I made mistake........thanks