Question

Jade invested $13,500 at 5.2% interest, compounded semiannually, and she wants to know how much her investment will be worth in 8 years


Part 1: What is the periodic interest rate of jade investment
Part 2: How many compounding periods does jades investment offer in a year? how about in 8 years?


Answer 1

Part 3: What expression can Jade write to figure out how much her investment will be worth in 8 years? F = $13,500.00 * (1 + .052/2) ^ (2*8)

Part 4: How much will Jade's investment be worth in 8 years? $20,355.96

Explanation:

Answer 2

Part 1: What is the periodic interest rate of jade investment?

Each compounding period is done semi-annually, which means twice a year. Since the given interest rate is annual, then 5.2% divided by half should yield the period interest rate, which is 2.6%

Part 2: How many compounding periods does Jade's investment offer in a year? how about in 8 years?

In 1 year, there are 2 compounding periods. In 2 years, there are 16 compounding periods.