Michelle has decided to invest $3000 at the end of each year for the next five years in a saving account that pays 8% annually, compounded semi-annually. How much is the annuity worth after 5 years? (Hint: be careful, interest conversion period, and investment period is not the same).
I got the correct answer by calculating the amount in the account after each year:
End of Year 1: $3000
End of Year 2: $3244.8+3000= 6244.80
End of Year 3: $9754.38
End of Year 4: $13550.33
End of Year 5: $17656.04
I was wondering if there was a formula that I could use. I know the formula for calculating the future value of an annuity, but the hint in the question confused me. So, i ended up calculating the amount after each year. The answer to this question should be $$17656.04.