Question

Robert Duncan made a $1500 deposit to savings account paying 1.6 annual interest compounded semi annually if he kept the money on the deposit for six months how much interest did Robert earn?

Answer 1

Answer: $12

Explanation:

The formula to calculate the compound interest , if the interest is compounded semi-annually :-

`A=P[(1+(r)/(2))^(2t)-1]`

, where P = Principal amount

r = rate of interest ( in decimal)

t= Time ( in years)

Given : P= $1500

r= 1.6 % =0.016

t= 6 months =
`(1)/(2)` year [∵ 1 year = 12 months]

Then, the interest earned by Robert in 6 months will be :-

`A=1500[(1+(0.016)/(2))^{2\cdot(1)/(2)}-1]`

`A=1500[(1+0.008)^(1)-1]`

`A=1500[1.008-1]`

`A=1500[0.008]=12`

Hence, Robert earned $12 as interest .