Question

Payments of $715 will be deposited every six months, beginning now. If money can earn 4.2% compounded semiannually, determine the balance at the end of seven years. ($2873.31) Cannot use Excel.

Answer 1

Balance at the end of seven years = Annuity * FVAF ( rate, number of years )

                                                  = $ 715 * FVAF ( 4.20% / 2, 7 * 2 )

                                                  = $ 715 * FVAF ( 2.10%, 14 )

                                                  = $ 715 * [ 1/1.021 + ..... + 1/1.021¹⁴ ]

= $ 715 * 16.0811

= $ 11,498.06 Answer