Answer to Question #171395 in Financial Math for King

Question

Compound amount

Aaron abbot invested 100,000 at 12% interest, compounded semi annually for 3 years. Manually calculate the compound amount and the compound interest of Aaron’s investment

Answer 1

$I = {P(1+\frac{r}{n})}^{nt}$

$Year1 = {100,000\ *\ (1+\frac{0.12}{2})}^{(2*1)} = 112360$

$Year2 = {112,360\ *\ (1+\frac{0.12}{2})}^{(2*1)} = 126,247.70$

$Year3 = {126,247.70\ *\ (1+\frac{0.12}{2})}^{(2*1)} = 141,851.91$

$1st\ year\ interest \ will\ be\ \$12,360$

$2nd\ year\ interest \ will\ be\ \$13,887.70$

$3rd\ year\ interest \ will\ be\ \$15,604.21$

$the \ total\ interest\ earned\ will\ be \ \$ 41,851.91\ after\ 3years$

$the \ compound\ amount \ earned\ will\ be \ \$ 141,851.91\ after\ 3years$