Answer
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A = 5,128.15
↓Steps Explained:↓
How much is 4000 worth after 20 semi-annual periods
using an annual interest rate of 2.50%
compounded semi-annual?
Calculate effective interest rate
There are 2 semi-annual periods in a year
Convert interest rate to semi-annual
| Semi-Annually Interest = | Annual Interest Rate |
| Compounding Periods |
| Semi-Annually Interest = | 0.025 |
| 2 |
Semi-Annually Interest = 0.0125
Calculate Accumulated Balance
A = B(1 + i)n
where A = accumulated balance
B = opening balance
i = Semi-Annually interest rate
and n = number of periods
Plugging in our values
A = 5,128.15
A = 4000(1.0125)20
A = 4000(1.2820372317086)
How much interest was earned?
Interest Earned = Accum. Value - Start Balance
Plug in our values
Interest Earned = 5,128.15 - 0.00
Interest Earned = 5,128.15
5128.15
Final Answer
A = 5,128.15Take the Quiz
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