Assume that you can invest to earn a stated annual rate of return of 12 percent, but where interest is compounded semi-annually. If you make 20 consecutive semi-annual deposits of $500 each, with the first deposit being made today, what will your balance be at the end of Year 20? Group of answer choices $52,821.19 $57,900.83 $58,988.19 $62,527.47 $64,131.50

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Assume that you can invest to earn a stated annual rate of return of 12 percent, but where interest is compounded semi-annually. If you make 20 consecutive semi-annual deposits of $500 each, with the first deposit being made today, what will your balance be at the end of Year 20?

Group of answer choices
$52,821.19
$57,900.83
$58,988.19
$62,527.47
$64,131.50
Expert Solution
Step 1

Based on the given information,

The semi-annual interest rate = 6%

Time period = 20

Amount = $500

We have to find the FV of the annuity due since the first deposit is made today

Using the FVIFA table, the FVIFA factor for 6% and 20 periods is 36.7856

The FV amount is 500 x 36.7856 = 18,392.8 

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