Ana is thinking about putting $200 in a savings account that earns 4% interest compounded semiannually. She wants to keep that money in the account for 2 years. Which of the formulas below can help her calculate how much money she will have at the end of the 2 years?

A. $200(1+0.04)^4
B. $200(1+0.01)^8
C. $200(1+0.02)^4
D. $200(1+0.08)^4
i thought it was A but apparently it was C....How is that?

Question

Ana is thinking about putting $200 in a savings account that earns 4% interest compounded semiannually. She wants to keep that money in the account for 2 years. Which of the formulas below can help her calculate how much money she will have at the end of the 2 years?

A. $200(1+0.04)^4
B. $200(1+0.01)^8
C. $200(1+0.02)^4
D. $200(1+0.08)^4
i thought it was A but apparently it was C....How is that?

dtan5457 · Answer

Do you know what semi annually means?

anonymous · Answer

nope :P

dtan5457 · Answer

It means twice a year. Therefore, if the interest is 4%, you divide that by 2.

anonymous · Answer

ohhh so would give me 0.02 right

dtan5457 · Answer

Exactly. Then it's ^4 as there will be 4 compounding periods. Twice a year, 2 years=4

anonymous · Answer

ohhhh i get it now ty o3o

dtan5457 · Answer

np.