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3 June, 21:38

David Spear invested $14,000 today in a fund that earns 10% compounded annually. Click here to view factor tablesTo what amount will the investment grow in 4 years? To what amount would the investment grow in 4 years if the fund earns 10% annual interest compounded semiannually?

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  1. 3 June, 23:05
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    given,

    compounded annually

    Present Value (PV) = $14,000

    rate = 10%

    time = 4 years

    Future value = ?

    F V = P V x (1 + i) ⁿ

    F V = $14,000 x (1 + 0.1) ⁴

    F V = $14,000 x 1.4641

    F V = $ 20,497.4

    compounded semiannually

    Present Value (PV) = $14,000

    rate = 5%

    time = 8

    Future value = ?

    F V = P V x (1 + i) ⁿ

    F V = $14,000 x (1 + 0.05) ⁸

    F V = $14,000 x 1.4775

    F V = $ 20,684.37
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