Question

In order to pay for college, Brooke's parents invest $20,000 in a bond that pays 8% interest compound semiannually. How much money will be there in 18 years?

Answer 1

To get the ending amount we will be using the formula

X=P ( 1 + r/n)^nt , where

x is the ending amount
P is the principal amount
r is the interest rate, in decimal form
n is the number of compoundings in one year, in this case n=2
t is the number of years

next is we substitute

x = $20,000 ( 1 + 0.08/2 )^2(18)
x = $20,000 ( 1 + 0.04)^36
x = $20,00 (1.04)^36
x = $20,00 (4.10393255398)
x = $82,078.65