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David Spear invested $14,000 today in a fund that earns 10% compounded annually.Click here to view factor tablesTo what amount will the investment grow in 4 years? To what amount would the investment grow in 4 years if the fund earns 10% annual interest compounded semiannually?

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Answer

given,

compounded annually

Present Value (PV) = $14,000

rate = 10%

time = 4 years

Future value =  ?

F V = P V x (1 + i)ⁿ

F V = $14,000 x (1 + 0.1)⁴

F V = $14,000 x 1.4641

F V = $ 20,497.4

compounded semiannually

Present Value (PV) = $14,000

rate = 5%

time = 8

Future value =  ?

F V = P V x (1 + i)ⁿ

F V = $14,000 x (1 + 0.05)⁸

F V = $14,000 x 1.4775

F V = $ 20,684.37

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