find the account balance after 20 years if $100 is replaced in a account that pays 1.2% interest compounded bi monthly

Question

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Answer 1

I will reword the question to make sense and then tell you how to solve it.

 

Find the account balance after 20 years if $100 is invested in the account that pays 1.2% interest compounded bi monthly

 

This is a single investment that accumulates interest. The formula is

 

Future Value = Present Value *(1+ r/t)^nt, where r is the annual interest rate t is the time period (in this case 24 periods per year, and n is the number of years.

 

FV = $100*(1..005)^480

FV =$127.12

 

Alternatively:

Find the account balance after 20 years if $100 is invested by-monthly in the account that pays 1.2% interest compounded bi monthly.

 

Now we have an ordinary annuity, whose formula is more complicated, but the problem can be solved with a spreadsheet function of a financial calculator. The variables are

 

FV = ?

PV = 0

PMT = 100

N = 480

i% = .05%

 

FV = $54,234.58