An investor expects to receive payments of $3,000 every 6 months for the next 7 years. If the market rate of interest is 4% per year compounded semi-annually, what is the future value of these payments?
A)$22,302.84
B)$23,694.87
C)$47,921.82
D)$54,875.73

Question

Quizplus · Accepted Answer

To calculate the future value of the payments, we can use the formula FV = PMT x ((1 + r)^n - 1) / r, where PMT is the payment amount, r is the interest rate per period, and n is the number of periods. In this case, PMT = $3,000, r = 4%/2 = 2% per half-year, and n = 7 x 2 = 14 half-years. Plugging these values into the formula, we get:

FV = $3,000 x ((1 + 0.02)^14 - 1) / 0.02 = $47,921.82

Therefore, the best choice is C.

An Investor Expects to Receive Payments of $3,000 Every 6