You deposit $10,000 in an account earning 5% interest, compounded semi-monthly (twice a month). You plan to leave the account untouched for 25 years. How much interest will you earn over the 25 years?

Question

Round your answer to the nearest cent.

Answer 1

P = Po(1+r)^n.

r = (0.05/12)*1/2 = 0.0020833 =
Semi-monthly % rate.

n = 2Comp/mo. * 300mo = 600 Compounding periods.

Solve for P.

I = P-Po.