5 compounded sem annually or wo sa the Future alle or pound

5% compounded sem annually or wo sa the Future alle or pound Amount of 100 T bl a or o mpound interest or mula Find the u ure value and compound nterest on S5,000 a Future Value or Compound Amount of $1.00. ear o it re a an Future value Round to the nearest cent as needed.) 6 Data Table Table Future Value or Compound Amount of $1.00 Rate per period Periods 196 1.5% 2% 2.5% 3% 4% 5% 6% 8% 1101000 1.01500 1.02000 1.02500 1.03000 1.04000 1.05000 1.06000 1.08000 2 1.02010 1.03023 1.04040 1.05063 1.06090 1.08160 1.10250 1.12360 1.16640 3 1.03030 1.04568 1.06121 1.07689 1.09273 1.12486 1.15763 1.19102 1.25971 4 1.04060 1.06136 1.08243 1.10381 1.12551 1.16986 1.21551 1.26248 1.36049 5 1.05101 1.07728 1.10408 1.13141 1.15927 1.21865 1.27628 1.33823 1.46933 Table shows future value (FV) of $1.00 compounded for N periods at R rate per period Table values can be generated using the formula FV S1(1RN Print Done Enter your answer in the answer box and then click Check Answe part Clear All Check Answer

Solution

When interest rates are compounded semi annually, time period is multiplied by 2 and interest rate is divided by 2

So, Applicable time period = 2 Years x 2 = 4 semi-annual periods

Interest rate = 5% / 2 = 2.5% per period

So, as per future value table, the compounding factor to be used for 4 period 2.5% interest rate is 1.10381

So, Future value

= Present value x Future value factor

= $5,000 x 1.10381

= $5,519.1

So, Compound Interest

= Future value – Present value

= $5,519.1 - $5,000

= $519.1