P = $10,000
R - 5% every 6 months
T - 4 years
Answers:
Simple Interest Formula:
A = P * [ 1 + r / n ]^(n*t)
Where:
A = Amount
P = Principal ($10,000)
r = interest rate (0.05)
t = time (in years = 4)
n = number of compoundings per year (2)
A = P * [ 1 + r / n ]^(n*t)
A = $10,000 * [ 1 + .05 / 2 ]^2*4
A = $10,000 * [ 1 + .025 ]^8
A = $10,000 * [ 1.025 ]^8
A = $10,000 * [ 1.2184028975099 ]
A = $12,184.03
The interest earned over 4 years at 5%, compounded biannually is $12,184.03 - $10,000 = $2,184.03
Good luck in your studies,
~ Mitch ~
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