Final answer:
The maturity value of an 8-year term deposit of $4225.35 at 3.5% interest compounded semi-annually is $5571.07. The total interest earned on the deposit is $1345.72. This calculation uses the compound interest formula with semi-annual compounding.
Step-by-step explanation:
The maturity value of a term deposit is the amount of money that will be received at the end of the investment period, including both the original deposit and the interest earned. To calculate the maturity value for a 8-year term deposit of $4225.35 at 3.5% interest compounded semi-annually, we use the compound interest formula:
A = P(1 + r/n)^(nt)
Where:
- A is the maturity value
- P is the principal amount ($4225.35)
- r is the annual interest rate (3.5% or 0.035)
- n is the number of times interest is compounded per year (2 for semi-annual)
- t is the number of years (8)
Plugging the values into the formula, we get:
A = $4225.35(1 + 0.035/2) ^ (2*8)
A = $4225.35(1 + 0.0175) ^ (16)
A = $4225.35(1.0175) ^ (16)
A = $4225.35 * (1.318245)
A = $5571.07
The maturity value of the deposit is $5571.07. The total interest earned is calculated by subtracting the original principal from the maturity value:
Interest Earned = Maturity Value - Principal
Interest Earned = $5571.07 - $4225.35
Interest Earned = $1345.72
Therefore, the deposit earned $1345.72 in interest over the 8 years.