How do you do this kind of plroblem?
What is the total balance due on a $20000 loan at 5% for 6years if it is compounded semi-annually?
(2x per year)

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  1. Pt = Po(1 + r)n.

    r = 5%/yr * 0.5yr = 2.5% = 0.025 = semi-annual rate expressed as a decimal.

    n=2 comp/yr * 6yrs = 12 comp. periods.

    Pt = 20000(1.025)^12,
    Pt = 20000 * 1.3449 = $26,897.78

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