Question

find the account balance after 20 years if 100$ is placed in an account that pays 1.2 % interest compounded twice a month

Answer 1

Answer:

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