Future Value Calculations for Compounding Frequencies

Maria has an investment of $10,000 that she wants to grow over a period of 5 years. She finds two different savings accounts that offer different compounding frequencies.

Account A compounds interest annually at a rate of 6% per year, while Account B compounds interest semi-annually at the same rate of 6% per year. Maria wants to determine which account will yield a greater balance at the end of 5 years.

To calculate the future value of her investment, she can use the formula for compound interest:

$$FV = PV (1 + r/n)^{nt}$$

Where:

• $$FV$$ = future value of the investment
• $$PV$$ = present value of the investment (initial amount)
• $$r$$ = annual interest rate
• $$n$$ = number of times the interest is compounded per year
• $$t$$ = number of years the money is invested for

What will be the future value of Maria's investment in Account B after 5 years?