Find the accumulated intrest of an investment of
$17,000 at 6% compounded semiannually for 6 years.
Thanks
First we find the value of the investment at the end of 6 years:
where P = 17000, r = .06, n = 2, t = 6
(we use n = 2 because "semianually" means "2 times a year")
We round that DOWN to $24,237.93 even though the
ordinary rule is to round up when the first
discarded decimal is 5 or more. Banks always
round down to the lower penny when they are the
ones paying out the money, (and of course they
round UP to the next higher penny when you are
one paying them a fee!)
Now the problem asks just for the interest earned,
so we must subtract the original $17,000 to find
how much interest was added:
$24,237.93 - $17,000 = $7,237.93
Edwin
