A loan is made for 2,500 at an interest rate of 8% compounded semiannually for 3 years. what is the future value of this loan after the 3 year period

Printable View

- December 7th 2008, 08:30 AMwaterboyinterest rate problem
A loan is made for 2,500 at an interest rate of 8% compounded semiannually for 3 years. what is the future value of this loan after the 3 year period

- December 7th 2008, 10:42 PMSteve_Jinterest rate problem
Assuming the question means you repay the loan in full in three years, pay no interest in the interim, and interest accrual begins in six months, here's what I think:

8% semi-annually for 3 years = 4% every six months for 6 six-month periods. So we could solve:

$2,500 * (1.04)^6 = $3,163.

- Steve J