Question

$1000 Principal with a 6% Interest Rate, Compounded Semi-Annually for 3 years.

(HINT: DO NOT USE 6% FOR YOUR CALCULATION)

Answer 1

$1,194.05

Step-by-step explanation:

The applicable formula is A = P x ( 1+ r) ^ n

Where A is the future amount

P is principal amount $1000

r is 6% per year or 0.06

n= time in years; 3 years

Since interest is compounded semi-annually, r will be 0.06 /2 = 0.03

n will be 3 years /2 = 6 periods

A = $1000 x ( 1 + 0.03) ^ 6

A = $1000 x 1.194052

A=$1,194.05