Problema Solution
Rigoberto invests $8,000, at 6% interest, compounded semiannually for 1 year. Use the compound interest formula to calculate the compound interest for his investment
Answer provided by our tutors
P = $8,000 is the principal value;
r = 0.06 or 6% interest rate;
m = 2 is the number of compounding periods per year;
t = 1 year;
i = r/m = 0.06/2 = 0.03 is the interest rate per period;
n = mt = 2*1 = 2 is the number of compounding periods;
A = is the future value;
A = P(1 + i)^n
A = 8000(1 + 0.03)^2
A = $8487.2
click here to see the calculation
the interest is 8487.2 - 8000 = $487.2.