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13 June, 00:06

Suppose you put $100 into a savings account today, the account pays a nominal annual interest rate of 6%, compounded semiannually, and you withdraw $100 after 6 months. What would your ending balance be 20 years after the initial $100 deposit was made? a. $ 62.91 b. $ 9.50 c. $115.35 d. $ 3.00 e. $226.20

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  1. 13 June, 01:02
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    The ending balance will be $9.50

    Option b

    Explanation:

    Given:

    Principal amount = $100

    Annual interest rate = 6%

    Compounding is semi-annual

    To find: The ending balance

    Balance after 6 months = 100+0.06*100/2 = $103

    Hence, balance remaining after withdrawal of $100 = $3

    Remaining periods =

    Balance after 20 years = Future Value (0.06/2,39,0, - 3) = $9.50
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