Northstar Engineering receives a $850,000 equipment settlement check and decides to invest it in a high-yield corporate bond fund that compounds semi-annually at an annual rate of 7.35%. The company plans to hold this investment for 12 years to fund a major facility expansion. What will the future value of this investment be at the end of the investment period?
Correct Answers
future_value
$2,021,138.07
Step-by-Step Solution
Future Value Formula: FV = PV × (1 + r)^n Present Value (PV): $850,000.00 Rate per period (r): 3.6750% Periods (n): 24 FV = $850,000.00 × (1 + 3.6750%)^24 FV = $850,000.00 × 2.377809 FV = $2,021,138.07