Question

If $4000 is deposited at the end of each half year in an account that earns 6.1% compounded semiannually, how long will it be before the account contains $100,000? (Round your answer to one decimal place.)

Answer 1

Information provided:

Future value= $100,000

Half yearly deposit= $4,000

Interest rate= 6.10%/2= 3.05%

The time taken to accumulate $100,000 is computed with the help of a financial calculator.

Enter the below in a financial calculator to calculate the time taken:

FV= 100,000

PMT= 4,000

I/Y= 3.05

Press the CPT key and N to compute the time taken to accumulate $100,000 in the account.

The value obtained is 47.8 half years.

Therefore, the time taken to accumulate $100,000 in the account is 47.8 half years or 47.8/2= 23.9 years.