SOLUTION: Your investment of $1,200 gets 5.1% and is compounded semi annually for 7 1/2 years. What will your $1,200 be worth at the end of the term

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Question 1067659: Your investment of $1,200 gets 5.1% and is compounded semi annually for 7 1/2 years. What will your $1,200 be worth at the end of the term
Answer by Theo(13342) About Me  (Show Source):
You can put this solution on YOUR website!
f = p * (1 + r) ^ n

f is the future value
p is the present value
r is the interest rate per time period.
n is the number of time periods.

5.1% compounded semi-annually becomes 5.1/2 = 2.55% semi-annually.

that's the interest rate percent.

the interest rate per 6 month time period is .0255.

p = 1200

n = 7.5 years * 2 time periods per year = 15 semi-annual periods of 6 month each.

your formula becomes:

f = 1200 * (1.0255) ^ 15

solve for f to get f = 1750.718079.

that's how much money you'll have at the end of the 7 and 1/2 years.

to find the interest rate per time period, you divide the annual interest rate by the number of time periods per year, in this case 2.
5.1% / 2 = 2.55% / 100 = .0255.

to find the number of time periods, you multiply the number of years by the number of time periods per year, in this case 2.
7.5 * 2 = 15