Question

Calculate the accumulated value after ten years of payments of $1000.00 made at the end of each month if interest is 4% compounded semi-annually.

Answer 1

First, we need to find the Effective Annual Rate(EAR)

EAR = ((1+(Interest rate/Number of periods))^Number of periods  - 1

EAR=  [(1+(4%/2))^2] - 1

EAR = 4.04%

Now we will use a BA 2 Plus financial calculator to calculate the future value of all the payments made:

I/Y ( Interest per period) = 4.04%/ 12 = 0.336%

PMT (Monthly Payment) = 1000

N(Number of payments) = 12*10 years = 120

CMPT FV

Accumulated value at the end of 10 years = $147,498.5