Back to the first question when
the interest is to be
compounded / counted every 6 months
and the interest rate is given on a per annum basis and
the time period of the
investment is
in months and more than a
year
Question
An amount of $5,000 is deposited in a bank which
paid an interest of 2.8% per
annum and
the interest is compounded / counted every 6
months.
Find the total amount in the account at the end of 27 months.
Total amount in the account at the end of 27 months
P = A [ 1 + ( { i /
2 } /100) ] ^ ( n x
2 ) + A [ 1 + ( { i / 2 } /100) ] ^ ( n x 2 ) x ( R / 100 ) x T
= [ 5000 [ 1 + ({ 2.8 / 2} / 100 ) ] ^ ( 2 x 2) ]
+ [ 5000 [ 1 + ({ 2.8 / 2} /
100 ) ] ^ ( 2 x 2) ]
x ( 2.8 / 100
) x ( 3 / 12
)
= $5322.94
Note :
(1) The
compound interest formula will be used for the 4 completed 6 months
ie 2 years
of investment and
the remaining 3 months investment will earn simple
interest.