--And it would also be easier for me to understand if the work is done like this

Question

--And it would also be easier for me to understand if the work is done like this class example in the photos below So, far we That means we hav found the looked at interest rates compounded annually." already had, year, added that amount money and ag and one get the next year more then calculat the interest we could could do that We kept doing that year after year. What if we often? What if we could add it on to what we had and then take o interest after a half-year, Do you think we would get the interest for the next half-year. end up with that total money? Let's see. 1. If you have $1,000 and 10 years, how much money compound 10% interest yearly for will you end up with

Explanation / Answer

PV $1,000 Principal Amount Invested at 5% Annual rate semi annual compounding 2.50% per period (5%/2) 20 Years 40 periods (20*2) Periods Money 0 1000 1 1000+ 2.5%*(1000) = 1000+ 25= 1025 2 1000+ 1025*(2.5%) = 1000+1025(.025) 40 periods $2,685.06 Formula used FV = PV*(1+r)^n here r = 2.50% n = 40 PV = 1000

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