Problema Solution
Ping invests $7000 in a saving certificate that has an interest rate of 3.75% per year, compounded semiannually.
(a) Find a formula for the amount A of the certificate after t years.
Answer provided by our tutors
P = $7,000 the principal
r = 0.0375 or 3.75% annual interest rate
m = 2 compounding period per year
i = r/m = 0.0375/2 = 0.01875 interest rate per period
t = years
n = t*m = 2t total number of compounding periods
A = the future value (the amount in the account after t years)
A = P(1 + i)^n
A = 7000(1 + 0.01875)^(2t) is the formula for the amount A of the certificate after t years.