The future value of $200 received today and deposited at 8 percent compounded semiannually for three years is ________.
A) $380
B) $158
C) $253
D) $252

Question

Quizplus · Accepted Answer

The future value (FV) of an investment is calculated using the formula FV = PV(1 + r/n)^(nt), where PV is the present value, r is the annual interest rate, n is the number of compounding periods per year, and t is the time in years. Here, PV = $200, r = 0.08, n = 2 (since it's compounded semiannually), and t = 3. Plugging these values into the formula gives FV = $200(1 + 0.08/2)^(2*3) = $200(1.04)^6 ≈ $253.

The Future Value of $200 Received Today and Deposited at 8