An amount is deposited for five years at 6% and is compounded semi-annually. Which interest rate and periods will be used to determine the present value?
A) 8% for 5 periods
B) 3% for 10 periods
C) 3% for 2.5 periods
D) 8% for 10 periods

Question

Quizplus · Accepted Answer

The interest rate per period is 3% (6% annual rate divided by 2 for semi-annual compounding), and the number of periods is 10 (5 years multiplied by 2 for semi-annual compounding).

An Amount Is Deposited for Five Years at 6% and Is