Question
Asked Jan 25, 2020
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Future value

What is the future value of $1,750 in 17 years assuming an interest rate of 6.5 percent compounded semiannually? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

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Expert Answer

Step 1

We need to use the concept of time value of money to solve the question. According to the concept of time value of money, the value of money available at the present time is more compared to the same sum in some future time. This is because of the earning potential of money, that is, we can earn interest on money by investing.

Step 2

The formula used for time value of money is:

Step 3

Here,
FV refers to future value
PV refers to present value
I refers to inter...

Finance homework question answer, step 3, image 1
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