Question

Maurice wants to purchase a home in six years. He will contribute $350 each month to a savings account with 2.12% interest, compounded semiannually. What is the future value of this investment, when Maurice needs to make a down payment?

Answer 1

First we need to find the semiannual payment because the interest rate is semiannually
350×6 months=2100

Now find the future value of an annuity ordinary using the formula of
Fv=pmt [((1+r/k)^(kn)-1)÷(r/k)]
Fv future value?
PMT semiannual payment 2100
R interest rate 0.0212
K compounded semiannual 2
N time 6years
Fv=2,100×(((1+0.0212÷2)^(2×6)
−1)÷(0.0212÷2))
=26,722.33