Question

A man deposits P650 every end of 6 months in an account paying 5.5 interest compounded semiannually. what amount is in the account at the end of 5 years and 6 months.

Answer 1

Answer: Amount at the end in the account is P8218

workings:

A= P[(1+r/n)^nt - 1]÷ r/n

A is the amount at the end in the account

P is the periodic deposit = P650

r is the interest rate = 5.5% = 0.055

n is 2 (compunded semiannually)

t is years deposited 5years , since initial investment is taken as 6 months(end)

^ is the to the power of that's to the power nt(2*5)

A = 650[(1+0.055/2)^2*5- 1]÷ 0.055/2

=650[(1.0275)^10 - 1]÷0.0275

=650(0.3477)÷0.0275

=P8218 that's amount invested is 7150(650+650*10) and 1068(interest)