Answer:
Explanation:
The investment below is compounded semi-annually, while an investment of the same principal at the same rate compounded annually would have interest compounded once per year.
The formula for compound interest is A = P(1 + r/n)^nt where A is the final amount, P is the principal, r is the annual interest rate, n is the number of times the interest is compounded per year and t is the number of years.
In the case of the semi-annual investment:
A = 9000(1 + 0.04/2)^(2*15) = $21,831.62
In the case of the annual investment:
A = 9000(1 + 0.04)^15 = $21,812.30
As we can see, the semi-annual investment yields a slightly larger return than the annual investment, $19.32 more. Compounding interest more frequently results in a larger return due to the interest earning interest.