Problema Solution
What is the future value of $4,000 in a bank account for 5 years at 6% compounded bimonthly
Answer provided by our tutors
P = $4,000
r = 0.06 or 6% annual interest rate
t = 5 years
m = 2*12 = 24 compounding periods per year
i = r/m = 0.06/24 interest rate per period
n = t*m = 5*24 = 120 total number of compounding periods
A = the future value
A = P(1 + i)^n
A = 4000(1 + 0.06/24)^120
A = $5,397.41
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the future value in 5 years is $5,397.41.