Question

An investor makes a 15 year deposit of $57,632. The bank is paying an interest rate of 11% per year, compounding twice a year. Calculate "i" (interest rate per period) correct to 2 decimal places.Please do not enter "%" into your answer box

Answer 1

The interest rate per period 'i' for an investor with a deposit of $57,632 and an annual interest rate of 11% compounded semi-annually is 5.50% or 0.055 when presented as a decimal.

Step-by-step explanation:

The interest rate per period, often denoted as 'i' in financial mathematics, can be calculated by taking the annual interest rate and dividing it by the number of compounding periods per year. In the case of the investor who deposited $57,632, with an annual interest rate of 11% compounded semi-annually, we can find 'i' as follows:

i = Annual Interest Rate / Number of Compounding Periods per Year

i = 0.11 / 2

i = 0.055

This means the interest rate per period, 'i', is 5.50% (expressed as a decimal, it is 0.055).