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March 27, 2017

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How much must you deposit in an account
that pays 6% semi-annual interest, compounded annually, to have a balance of $9000 in 15 years?

  • Math - ,

    P = Po(1+r)^n.

    P = $9,000.
    r = (2*6%/100%) = 0.12 = Annual % rate expressed as a decimal.
    n = 1Comp./yr * 15yrs = 15 Compounding
    periods.

    P = Po(1.12)^15 = 9,000.
    Po = 9000 / (1.12)^15 = $1644.27.

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