john saves 10000 every semester in a bank a/c which pays 10%. How much will he redeem after 1.5 years compounded semiannually at the end of semester?
The interest rate is 10% per semester, which is equivalent to 5% per half-year.
The time period is 1.5 years, or 3 semesters. Since the interest is compounded semiannually, there will be 6 compounding periods.
After the 1st semester, the amount in the account will be:
10000 + (10000 * 5%) = 10000 + 500 = $<<10000+500=10500>>10,500
After the 2nd semester, the amount in the account will be:
10500 + (10500 * 5%) = 10500 + 525 = $<<10500+525=11025>>11,025
After the 3rd semester, the amount in the account will be:
11025 + (11025 * 5%) = 11025 + 551.25 = $<<11025+551.25=11576.25>>11,576.25
Therefore, John will redeem $11,576.25 at the end of 1.5 years compounded semiannually.