I can't get it please help!...
John deposited $1,000 at a 10% interest rate for 5 years. How much more money will John have in his account from compound interest than from simple interest if it is compounded semiannually?
Simple Interest:
A = P + (P � r � t)
A = 1,000 + (1,000 � 0.1 � 5)
A = 1,000 + (100 � 5)
A = 1,000 + 500
A = $1,500
Compound Interest:
A = P (1 + r / k) k * n
A = 1,000 (1 + 0.1/2) 2 * 5
A = 1,000 (1 + 0.05) 10
A = 1,000 (1.05) 10
A = 1,000 � 1.62889
A = $1,628.89
how did it get $1,62889 ?
2007-12-16
15:39:30
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2 answers
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asked by
pielago2001
1
in
Personal Finance