Question

The future value of $100 at 10 percent compounded semiannually is ______ the future value of $100 at 10 percent compounded annually. Multiple choice question. equal to less than

Answer 1

The total amount accrued, principal plus interest, with compound interest on a principal of $100.00 at a rate of 10% per year compounded 2 times per year over 1 years is $110.25.

Computation of Compound Interest

Given Data

Principal = $100

Rate = 10%

Time = 1 year

A = P + I where

P (principal) = $100.00

I (interest) = $10.25

Calculation Steps:

First, convert R as a percent to r as a decimal

r = R/100

r = 10/100

r = 0.1 rate per year,

Then solve the equation for A

A = P(1 + r/n)^nt

A = 100.00(1 + 0.1/2)^(2)(1)

A = 100.00(1 + 0.05)^(2)

A = $110.25

Answer:

A = $110.25

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