What is the future value of $1,500 after 5 years if the annual return is 6%, compounded semiannually?
A) $1,819
B) $1,915
C) $2,016
D) $2,117

Question

Quizplus · Accepted Answer

Using the formula for compound interest:

FV = PV x (1 + r/n)^(n*t)

Where: 
PV = $1,500 (present value) 
r = 6% (annual interest rate) 
n = 2 (compounding periods per year) 
t = 5 (number of years)

FV = $1,500 x (1 + 0.06/2)^(2*5) = $2,016.36

Rounding to the nearest dollar, the future value is $2,016. Therefore, the best choice is C.

What Is the Future Value of $1,500 After 5 Years