Use a financial calculator or computer software program to answer the following questions. a. What would be

Question:

Use a financial calculator or computer software program to answer the following questions.

a. What would be the future value (FV) of $19,378 invested now if the money remains deposited for eight years, the annual interest rate is 18 percent, and interest on the investment is compounded semiannually?

b. How would your answer for (a) change if quarterly compounding were used?

Using a financial calculator, enter 19378 and press PV, enter 4.50 (18/4) and press %i, and enter 32 (8 × 4) and press N. Then, press CPT and FV which gives an answer of 79255.65 or $79,255.65.

Compounding
Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This growth, calculated using exponential functions, occurs because the investment will... Future Value
Future value (FV) is the value of a current asset at a future date based on an assumed rate of growth. The future value (FV) is important to investors and financial planners as they use it to estimate how much an investment made today will be worth...