Asked by Renee Sinclair on Jun 25, 2024
Verified
Susan Phillips made two $1200 deposits every year (i.e., semiannual) for 10 years. If the investment pays a return of 6% compounded semiannually, how much interest would Susan's investment earn during the 10 years? Use Tables 23-1A and 23-1B or a calculator.
Compounded Semiannually
Refers to the process of applying interest to a principal sum twice a year, resulting in an increase in the amount of interest earned or paid.
Semiannual
Occurring twice a year; pertaining to a period of six months.
Interest Earn
The income received by an investor for lending funds or depositing money in interest-bearing accounts.
- Comprehend and execute the ideas associated with the future and present values of annuities and investments.
- Understand the impact of compounding frequency on the growth of investments.
- Engage financial tables or calculators for precise economic planning and numerical calculations.
Verified Answer
MN
Minh-Tu NguyenJun 29, 2024
Final Answer :
$1,200 × 26.87037 = $32,244.44; $1,200 20 = $24,000;
$32,244.44 -$24,000 = $8,244.44 interest earned
$32,244.44 -$24,000 = $8,244.44 interest earned
Learning Objectives
- Comprehend and execute the ideas associated with the future and present values of annuities and investments.
- Understand the impact of compounding frequency on the growth of investments.
- Engage financial tables or calculators for precise economic planning and numerical calculations.