$1000 is invested at a rate of 12% compounded twice per year. What is the balence at the end of 25 years?

Question

And could you please explain how you go the answer!? Like what formula whould you use?! Thank you very much!

Answer 1

Compounding uses this equation:

amount = initial_balance * (1 + rate_per_period) ^ num_periods

It's important to use the rate per period of compounding, which is not necessarily the annual rate. In this case, the rate per period is 6%, which is 1/2 of the annual rate, because the compounding period is 1/2 of a year.

The number of periods is 50 six-month periods (in 25 years).

So, you are looking for:

$1,000 * (1 + 0.06)^50

... which equals about $18,420.

Answer 2

I think the formula is:

Balance = P * (1+ r/n)^n*t

= 1000*(1+.12/2)^2*25

= 1000 * 1.06^50 = 18,420

Not 100% sure this is correct.

Answer 3

The half year rate would be 6% so after 25 years the value is
C=1,000*(1.06)^50 =$18,420.15