The future value of a $1,000 investment today at 8% annual interest compounded semiannually for 5 years is:
A) $1,469
B) $1,480
C) $1,520
D) $1,555

Question

Quizplus · Accepted Answer

We can use the formula for compound interest to solve the problem:

FV = PV(1 + r/n)^(nt)

where:
FV = future value
PV = present value
r = annual interest rate
n = number of times the interest is compounded per year
t = number of years

Plugging in the given values, we get:

FV = 1000(1 + 0.08/2)^(2*5)
FV = 1000(1.04)^10
FV = $1,480.24

Therefore, the best choice is B, with a future value of $1,480.

The Future Value of a $1,000 Investment Today at 8