Question 1173740: Investment earns 8.25% annually. Explain how you would calculate i and n when the interest is compounded:
a) semi-annually for 6 years
b) daily for 3 years
Found 2 solutions by ikleyn, greenestamps:
Answer by ikleyn(52787)   (Show Source):
Answer by greenestamps(13200)  (Show Source):
You can put this solution on YOUR website!
a) 8.25% annual, compounded semi-annually:
You want the periodic interest rate i, when applies 2 times a year, to give an annual interest rate of 8.25%, or 0.0825:
Use a calculator....
n is the number of compounding periods. 6 years, 2 times a year, so n=6*2=12.
b) 8.25% annual, compounded daily:
Same calculations as above, with a different number of compounding periods per year.
The exact answers depend on whether you use 365 days in a year or, as is often done, the rounded number of 360.
Since I don't know which you want to use, and since the calculations are exactly the same as for the first case, I leave the calculations to you.
|
|
|
