Answer: FVA =$ 7507.74
Working noted for the above answer is as under
We have been provided with the information as
$200 received every 6 months
for 15 years
3% compounded semiannually
Formula for annuity is
Now we put the figures in to the formula as under
FVS =200 * (1+0.03/2)15*2 -1 /0.03/2)
FVA =200* (1+0.015)30 -1 /0.015
Solving this equation we will get
FV A = $ 7507.74
Or you can use the following table for better understanding
Year | Payments | Interest | Balance |
1 | 400 | 3 | 403 |
2 | 400 | 15.18 | 818.18 |
3 | 400 | 27.73 | 1245.91 |
4 | 400 | 40.66 | 1686.57 |
5 | 400 | 53.98 | 2140.54 |
6 | 400 | 67.7 | 2608.24 |
7 | 400 | 81.83 | 3090.08 |
8 | 400 | 96.4 | 3586.47 |
9 | 400 | 111.4 | 4097.88 |
10 | 400 | 126.86 | 4624.73 |
11 | 400 | 142.78 | 5167.52 |
12 | 400 | 159.19 | 5726.7 |
13 | 400 | 176.09 | 6302.79 |
14 | 400 | 193.5 | 6896.3 |
15 | 400 | 211.44 | 7507.74 |
Totals | 6000 | 1507.74 | 7507.74 |