Question

1.) Your 3 year investment of $20,000 received 5.2% interested compounded semi annually. What is your total return? ASW

Answer 1

Let's begin by listing out the information given to us:

Principal (p) = $20,000

Interest rate (r) = 5.2% = 0.052

Number of compounding (n) = 2 (semi annually)

Time (t) = 3 years

The total return is calculated as shown below:

A = p(1 + r/n)^nt

A = 20000(1 + 0.052/2)^2*3 = 20000(1 + 0.026)^6

A = 20000(1.1665) = 23,330

A = $23,330