Problema Solution
How much would i have in total if I out $500 in the bank for 2 years at 6% interest compounded semiannually?
Answer provided by our tutors
P = $500 principal amount (initial investment)
r = 0.06 or 6% annual nominal interest rate
n = 2 number of times the interest is compounded per year
t = 2 years number of years the money is invested
A = the future value after 2 years
The formula for A is:
A = P (1 + (r/n))^ (n*t)
A = 500(1 + 0.06/2)^(2*2)
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click here to see the step by step calculation for A
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A = $562.75
After 2 years there will be $562.75 in the bank.