Question

Find the total investment and the interest earned when $2,500 is invested at 5% compounded semiannually for 3 years.

Answer 1

P = Po(1+r)^n.

Po = $2,500 = Initial investment.

r = (5%/2)/100% = 0.025 = Semi-APR expressed as a decimal.

n = 2Comp/yr * 3yrs = 6 Compounding periods.

Plug the above values into the given Eq and get:

P = $2899.23

I = P-Po