A sum of R15000 is invested at a nominal rate of 15% per annum compounded semi-annually. What will this amount to at the end of a term of 2 years?


R20032.04


R17334.38


R11232


R17395.40


R26752.17

1 answer

The formula to calculate the future value of an investment with compound interest is:

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

Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (R15000)
r = the annual interest rate (15% or 0.15)
n = the number of times that interest is compounded per year (2 for semi-annually)
t = the number of years the money is invested for (2)

Plugging in the values:

A = 15000(1 + 0.15/2)^(2*2)
A = 15000(1 + 0.075)^4
A = 15000(1.075)^4
A = 15000(1.322917)
A = 19843.755

Therefore, the amount will be R19843.76 at the end of 2 years.