Question

$1,030 at 4% compounded semiannually for 2 Years. please can you give the process to do it because i have problem about the process of that kind of work.

Answer 1

EXPLANATION

Let's see the facts:

Initial Amount = $1,030

Interest rate = 4% = 0.04 (in decimal form)

Compounding rate = Semiannually = 2 times by year

Time= 2 years

As we already know, the Formula to calculate the Principal is as follows:

`P=I(1+(r)/(n))^(nt)`

Substituting terms:

`P=1030(1+(0.04)/(2))^(2\cdot2)`

Adding numbers:

`P=1,030(1.02)^4`

Simplifying the power:

`P=1,030\cdot1.0824=1,114.87`

The Amount obtained is $1,114.87