Question

Manually calculate the compound interest on an investment of $8,000 at 6% interest, compounded semiannually, for 18 months.

a.$783.54
b.$788.18
c.$8,759.35
d.$8,788.18

Answer 1

divide the interest rate by 72
.6 divided by 72

Answer 2

Is that all I need to do it

Answer 3

.6/72=.0083333333

Answer 4

Annual interest rate = 6% = 0.06.
Compounded semi-annually (meaning every 6 months)
Semi-annual interest rate = 0.06 / 2 = 0.03
Interest after first 6 months = p*r*t = 8000 * 0.03 * 1 = 240
Total amount after 6 months = principal + interest = 8000 + 240 = 8240

Interest after another 6 months: P*r*t = 8240 * 0.03 * 1 = ?
add the interest to 8240 to get the amount.

do the same calculations one more time for another 6 months to get a total of 18 months.

Answer 5

They are interested only in the total interest and not the total amount. So in the end add up just the interest for the 3 time periods.

Answer 6

look up the principle of 72 in ref of marketing

Answer 7

I got 8,487.2 is this right

Answer 8

yes i belive so

Answer 9

that isn't one of the answers

Answer 10

Ok thanks is that I need to do

Answer 11

Is that all I need to do

Answer 12

I got (8000)(1+0.03)^3 - 8000 = 741.82, which should be right but isn't listed. Three six-month periods at 3% compounded.