The future value of $200 received today and deposited for three years in an account which pays semiannual interest of 8 percent is ________ .
A) $158.00
B) $252.00
C) $134.66
D) $253.00

Question

Quizplus · Accepted Answer

The interest rate is 8% per year, compounded semiannually, so the interest rate per compounding period is 4% (8%/2). The number of compounding periods is 3 years × 2 periods/year = 6 periods. Therefore, the future value of the $200 is:

$200 × (1 + 0.04)^6 = $252.00

The Future Value of $200 Received Today and Deposited for Three