Math Is Fun Forum

bilat

Member

Registered: 2008-04-23

Posts: 4

Help

$35,000 at 11% compounded semiannually for 2 years

Please show workings out and the answer.

Jai Ganesh

Administrator

Registered: 2005-06-28

Posts: 48,425

Re: Help

bilat,
The formula for calculation Compound Interest is

where A is the Amount, that is, the Principal plus Compound Interest,
P is the Principal,
r is the rate of interest in percentage,
and n is the number of periods (not number of years : it is the number of periods which may be months, quarters, half-years or years depending on the problem).

In the question you posted, the principal is #35,000,
r is 11% (aauming that the rate of interest is 11% semi-annually) and n=4 (since 2 years is 4 half years)

A=35,000 (1+11/100)^4=35,000(111/100)^4=
35,000(1.11)^4 = 35,000(1.4641) = 51243.5

Therefore, Compound Interest = A-P = 51243.5-35000
= $16,243.5

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It appears to me that if one wants to make progress in mathematics, one should study the masters and not the pupils. - Niels Henrik Abel.

Nothing is better than reading and gaining more and more knowledge - Stephen William Hawking.

bilat

Member

Registered: 2008-04-23

Posts: 4

Re: Help

your answer is wrong

Jai Ganesh

Administrator

Registered: 2005-06-28

Posts: 48,425

Re: Help

Since the question was not specific about the interest rate, i had to assume it was 11%  half-yearly.
If it is 11% per annum, the interest rate would be 5.5% per half year. In this case, the answer would be
A = P(1+5.5/100)^4= P(105.5/100)^4=P(1.055)^4
= 35000(1.2388) = 43,358.86
Therefore, Compound interest would be $8358.86

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It appears to me that if one wants to make progress in mathematics, one should study the masters and not the pupils. - Niels Henrik Abel.

Nothing is better than reading and gaining more and more knowledge - Stephen William Hawking.

bilat

Member

Registered: 2008-04-23

Posts: 4

Re: Help

the answer is $43,358.86

Last edited by bilat (2008-05-28 07:11:19)