A $3,500 principle earns 3% interest, compounded semiannually. After 20 years, what is the balance in the account?

Question

whpalmer4 · Answer

Use "principal", not "principle" when speaking of money.

$$FV = PV(1+\frac{r}{n})^{nt}$$where $FV$ is future value, $PV$ is present value, $r$ is the interest rate, expressed as a decimal, $n$ is the number of compounding periods per year, and $t$ is the number of years.

anonymous · Answer

I know, I've tried doing that already, but I can't seem to do the nt part at the end.

anonymous · Answer

3500(1+.03/2)^2*22 right?

whpalmer4 · Answer

close, but not quite.  $$nt = n*t$$

anonymous · Answer

Yeah, n = 2 because it's semiannually right?

whpalmer4 · Answer

yes, but $$2*20 \ne 22$$ :-)

whpalmer4 · Answer

$$3500(1+\frac{0.03}{2})^{2*20}$$

anonymous · Answer

So the nt is actually 40 ?

whpalmer4 · Answer

$$n = 2$$$$t=20$$$$nt = (2)(20) = 40$$

anonymous · Answer

I just put the whole thing on a calculator and got a weird number. I think I'm doing something wrong :(

whpalmer4 · Answer

what was the weird number you got?

anonymous · Answer

1.03838213e-8

whpalmer4 · Answer

yep, that's wrong :-)

anonymous · Answer

Lol I knew it

anonymous · Answer

Well, what I'm I doing wrong? I have all the functions and stuff :(

whpalmer4 · Answer

I don't know what buttons you're pushing, or what kind of a calculator you have.  I would work it like this:

0.03/2
+1
now raise that to the 40th power
* 3500

anonymous · Answer

Yeah, I did it exactly like that!

whpalmer4 · Answer

Well, you must have done something wrong in the process.  Try it again.

anonymous · Answer

Got it!

anonymous · Answer

6349.06

anonymous · Answer

Thank you!

anonymous · Answer

What is the formula for depreciate?

whpalmer4 · Answer

Yeah, that looks more like it.

Sorry, don't recall the depreciation formula...

anonymous · Answer

Well that's okay. thanks for your help.