Wednesday

October 22, 2014

October 22, 2014

Posted by **Hilda** on Sunday, February 25, 2007 at 8:16pm.

$2000 is invested at 6.125%,compounded

semi-anually,for 2 years.

A. $2,256.49

B. $2,252.50

C. $2,324.89

D. $544,757.84

One of these is the correct answer.

I am coming up with (D) 544,757.84

Can you check, because I am probably wrong.

You are wrong. How can one invest 2000 dollars at a modest rate of interest for two years and get a half-million dollars?

Post your work, I will check.

Instead of calculating interest year-by-year, it would be simple to see the future value of an investment using a compound interest formula. The formula for compound interest is:

Pn = P0(1 + I)n

where:

Pn = Value at end of n time periods

P0 = Beginning Value

I = Interest

n = Number of years

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