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Anthony and Michelle Constantino just got married and received ​$23,000 in cash gifts for their wedding....

Anthony and Michelle Constantino just got married and received ​$23,000 in cash gifts for their wedding. How much will they have on their​ twenty-fifth anniversary if they place half of this money in a​ fixed-rate investment earning 10 percent compounded annually. Would the future value be larger or smaller if the compounding period was 6​ months? How much more or less would they have earned with this shorter compounding​ period? 

Would the future value be larger or smaller if the compounding period was 6 months?

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Answer #1

Semi annual compounding future value is larger than annual compunding.

Larger by $7,246 ($131,875-$124,599)

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