How do you figure out compound future value!!!
Time 3 years
Principal $2,000
Rate 12%
Compounded Semiannually
Amount ?
Interest ?
Could someone give me any idea how to figure this out.
How do you figure out compound future value!!!
Time 3 years
Principal $2,000
Rate 12%
Compounded Semiannually
Amount ?
Interest ?
We need to convert the annual interest into the rate for each period of compounding: The semiannual interest = .06
There are 6 semiannual compounding periods in 3 years
FV= P(1+k)^n
FV = 2000(1.06)^6
To find the interest, subtract the future value minus principal invested.