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Super
Lv 4
Super asked in Science & MathematicsMathematics · 7 years ago

How do I do this? Math?

Tell me where im going wrong?

A(n) = P(1+i)^n

A = Future Value

P = Principal (or initial value)

i = Interest rate

n = Number of years

a) Determine the future value of $1000 invested at 8% compounded semi-anually for 20 years.

b) Determine the future value of $1000 incested at 8% compounded quarterly for 20 years.

What I want to know is, for the interest do I double it for "a" (making it 16%) cause its semi-anual? And quadruple "b" (making it 32%) cause its quarterly?

Or am I completely off? How do I do this?

Update:

Hit show more to see the rest of the question I guess... I really dont like this feature...

2 Answers

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  • Guy
    Lv 7
    7 years ago

    a) A = 1000(1 + .08/2)^(2*20) = $4801.02

    b) A = 1000(1 + .08/4)^(4*20) = $4875.44

  • ?
    Lv 7
    7 years ago

    You are using the simple interest formula for compound interest. You need

    A = P(1 + i/n)^(nt)

    Where n is the number of annual compounding periods and t is years

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