What is the future value of 121900 invested at 10 percent compounded semi-annually for 25 years?

Answer 1

Compounding semiannually for 25 years means that there will be 50 instances of compounding at 5 % per instance. After the first instance, the value will be 121900(1 + 0.05); after the second instance, the value will be [121900(1.05)](1.05), etc. After fifty intervals, the value will be 121900(1.05)50.

The value of (1.05)50 can be most readily approximated by using logarithms. The decimal logarithm of 1.05) is about 0.021189299. Multiplying this value by 50 gives about 1.059464953. The decimal antilog of this number is about 11.46739977; therefore; the value of the investment after 25 years will be about 1,397,876.032.