what is the future value of $2,000 in a bank account for 6 years at 4 percent compounded bimonthly
Present value=PV=2000
r=rate per period(6 periods/year)=(0.04/6)
n=number of periods=6years*6periods/year=36
Use following formula to calculate future value
FV=PV*(1+r)^n
To find the future value of $2,000 in a bank account for 6 years at a 4% interest rate compounded bimonthly, we can use the formula for compound interest:
FV = P(1 + r/n)^(nt)
Where:
FV = Future Value,
P = Principal amount (initial deposit),
r = Annual interest rate (in decimal form),
n = Number of times interest is compounded per year, and
t = Number of years.
In this case, our principal amount (P) is $2,000, the annual interest rate (r) is 4% or 0.04, we compound interest bimonthly, so the number of times we compound per year (n) is 12 (since there are 12 months in a year, bimonthly would be every 2 months), and the number of years (t) is 6.
Substituting these values into the formula, we get:
FV = $2,000(1 + 0.04/12)^(12*6)
Now let's calculate the future value using a calculator or a spreadsheet:
FV = $2000 * (1 + 0.04/12)^(12*6)
= $2000 * (1 + 0.003333)^72
= $2000 * (1.003333)^72
= $2000 * 1.269701
= $2,539.40 (rounded to the nearest cent)
So, the future value of $2,000 in a bank account for 6 years at a 4% interest rate compounded bimonthly would be approximately $2,539.40.