Question 643165
when you compound, you divide the interest rate by the compounding period and you multiply the number of time periods by the compounding period.

in your problem, you have 28,000 invested at 12% compounded semi-annually for 4 years.


the interest rate is equal to 12/2 = 6% per semi-annual period.
the number of semi-annual periods is equal to 4*2 = 8.


use your compounding table at 6% for 8 periods and you should get your answer.


the formula for compounding is:


f = p * (1+(i/c))^(y*c)


f = future value
p = present value
i = annual interest rate (this equals % divided by 100).
c = number of compounding periods per year.
y = number of years.


c = 2 because you are compounding 2 times a year (semi-annual)
i = .12 / 2 = .06
y*c = 4*2 = 8
p = 28000

formula becomes:


f = 28000 * 1.06^8


your answer should be:


f = 28,000 * (1.06)^8 which is equal to 44627.75 rounded to 2 decimal places.