Answer:
The correct answer is:
$407,223. (a.)
Explanation:
This question requires us to calculate the future value of a certain sum of money invested yielding a compound interest, and the formula for this calculation is given below:
FV = [tex]PV*(1 + \frac{i}{n} )^{n*t}[/tex]
where:
FV = future value = ???
PV = present value = $250,000
i = compound interest in decimal = 10% = 0.1
n = compounding period per year = semiannually = 2
t = compounding period in years = 5 years
∴ FV = [tex]250,000*(1 + \frac{0.1}{2} )^{(2*5)}[/tex]
FV = 250,000 × [tex]1.05^{10}[/tex]
FV = 250,000 × 1.62889466268 = 407,223.65
