Question

$1,600 principal earning 7%, compounded semi-annually, after 33 years. solve and explain

Answer 1

the number of time periods needs to double... from 33 years to 66 half years... to match the compounding period.

the formula is

\[A = P(1 + \frac{r}{100})^n\]

P = principal, r = interest rate and n = number of time periods

the only pert I am unclear on is the interest rate.... is it 7% per annum or 7% per half year?

the calculations are

HALF YEAR at 7%

\[A = 1600(1+\frac{7}{100})^{66}\]

HALF YEAR at 3.5%

you need to change the annual interest to half yearly 7/2 = 3.5

\[A = 1600(1 + \frac{3.5}{100})^{66}\]

just calculate you answer