Question

A man deposits P650 every end of 6 months in an account paying 5 1/2 % interest compounded semiannually. What amount is in the account at the end of 5 years and 6 months?

Answer 1

What do you mean by P650? Is that a typo?

Answer 2

does the currency actually matter? it's an exercise in grossing up interest, surely?

Answer 3

Welcome to QC. be a little more specific please.

Answer 4

The pattern looks like this:

0) 0

1) 650

2) 650 + (650 * R)

3) 650 + (650 + (650 * R) * R

4) 650 + (650 + (650 + (650 * R) * R)* R

...

N) \( 650 (R^0 + R^1 + R^2 + R^3 + ... + R^{N-1})\)

A Geometric Series.

R is semi-annual compounding rate: ie 5.5 % / 2

5 yr & 6m = 11

Answer 5

correction:

R is semi-annual compounding rate: ie \(R = 1 + {5.5 \% \over 2}\)