SOLUTION: an annuity pays 6.55% annual interest rate compunded semiannually. If $500 is deposited every six months for two years, how much interest is earned?

Question 219967: an annuity pays 6.55% annual interest rate compunded semiannually. If $500 is deposited every six months for two years, how much interest is earned?
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
an annuity pays 6.55% annual interest rate compunded semiannually. If $500 is deposited every six months for two years, how much interest is earned?
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A(t) = P(1+(r/n))^(nt)
A(2) = 500(1+(0.0655/2))^(2*2)
A(2) = 500(1.1376)
This is the value of the account after 2 years.
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Interest = 0.1376*500 = $68.79
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Cheers,
Stan H.
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