Question

900 invested at 6% compounded semi-annually for 5 years what is the formula for that

Answer 1

Amount after 5 years is 1209.51

Step-by-step explanation:

Principal = P = 900

rate = r = 6% = 0.06

time = t = 5 years

n = number of times compounded in a year

n = semi -annual = twice in a year

n = 2 times

FV = future value = amount after 5 years

We would apply the compound interest formula:

`FV\text{ = P(1 +}(r)/(n))^(nt)`

inserting the values into the formula:

`\begin{gathered} FV\text{ = }900(1\text{ + }(0.06)/(2))^(2*5) \\ FV=900)(1+0.03)^(10) \end{gathered}`
`\begin{gathered} FV=900(1.03)^(10) \\ FV\text{ = 900}(1.3439) \\ FV\text{ = 1209.51} \end{gathered}`