Question

Joseph borrows $10000 from his sister Katie at an annual interest rate of 10%. If the

interest is compounded twice a year, how much does he owe after 12 months? Give your answer in dollars.

Answer 1

A = P ( 1 + r / n) ^( t * n)

where

A = the amt owed

P = amt borrowed

r = the interest rate as a decimal

n = the number of compoundings per year

t = the number of years

A = 10000 ( 1 + .10 / 2)^(2 *1) = 10000 ( 1.05)^2 = $11025

Explanation: