Question

A $4,300.00 principal earns 5% interest, compounded semiannually. After 10 years, what is the balance in the account?

Answer 1

it's all plug and chug.

Answer 2

Well, would it be
FV = PV (1+r)^n
future value = 4300(1+0.05)^10

Answer 3

close, that would be true if you were compounding annually

Answer 4

instead you're compounding semiannually (so 2 times a year)

Answer 5

So it would be 4300(1+0.05)^20

Answer 6

closer

Answer 7

you divide the 5% annual interest in half to get the interest rate per period (in this case, every 6 months)

so 0.05/2 = 0.025

Answer 8

it should be 4300(1+0.025)^20

Answer 9

the 20 is the number of periods (2*10 = 20)

basically 20 six-month periods

Answer 10

7046.05?

Answer 11

good

Answer 12

Thank you so much!

Answer 13

np