Question

$1,030 at 4% compounded semiannually for 2 Years. please can you give the process to do it because i have problem about the process of that kind of work.

Answer 1

EXPLANATION

Let's see the facts:

Initial Amount = $1,030

Interest rate = 4% = 0.04 (in decimal form)

Compounding rate = Semiannually = 2 times by year

Time= 2 years

As we already know, the Formula to calculate the Principal is as follows:

$P=I(1+\frac{r}{n})^{nt}$

Substituting terms:

$P=1030(1+\frac{0.04}{2})^{2\cdot2}$

Adding numbers:

$P=1,030(1.02)^4$

Simplifying the power:

$P=1,030\cdot1.0824=1,114.87$

The Amount obtained is $1,114.87