The future value of $200 received today and deposited for three years in an account which pays semiannual interest of 8 percent is ________.
A)$253
B)$252
C)$158
D)$135

Question

Quizplus · Accepted Answer

The future value of $200 received today and deposited for three years in an account which pays semiannual interest of 8 percent is $253. This is because the interest is compounded semiannually, so the interest earned in the first six months is added to the principal, and then the interest earned in the second six months is added to the new principal. This process continues for three years, resulting in a future value of $253.

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