What is the future value of $1,730 in 15 years assuming an interest rate of 7.00 percent compounded

What is the future value of $1,730 in 15 years assuming an interest rate of 7.00 percent compounded semiannually? (Do not include the dollar sign ($). Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Future value

$

rev: 04-30-2011

Explanation:

For this problem, we simply need to find the FV of a lump sum using the equation:

FV = PV(1 + r)t

It is important to note that compounding occurs semiannually. To account for this, we will divide the interest rate by two (the number of compounding periods in a year), and multiply the number of periods by two. Doing so, we get:

FV = $1,730[1 + (0.0700/2)]30

FV = $4,855.75

Calculator Solution:

Note: Intermediate answers are shown below as rounded, but the full answer was used to complete the calculation.

Enter

15 × 2

7.00% / 2

±$1,730

N

I/Y

PV

PMT

FV

Solve for

$4,855.75