What is the future value of $50,000, 25 years from now, assuming semiannual compounding and an annual interest rate of 6%?
Reveal the Answer
The answer is:
N = # of years × compounding periods per year = 25 × 2 = 50
i = annual rate ÷ compounding periods per year
FV = PV × (1 + i)^N
= 50,000 × (1 + .06/2)(25×2)
= 50,000 × 4.3839
= $219,195.30
