Question

Lynn Ally, owner of a local Subway shop, loaned $51,000 to Pete Hall to help him open a Subway franchise. Pete plans to repay Lynn at the end of 9 years with 4% interest compounded semiannually.

Answer 1

Pete plans to pay off Lynn on the give-up of 9 years with 4% interest compounded semiannually=$116,815.96.

A = P(1 + r/100)t

A=59000(1+0.1/2)^(2*7)

=$59000*1.979931599

interest compounded =$116,815.96

Compounding hobby semiannually method that the fundamental of a loan or investment at the start of the compounding period, in this case, every six months, consists of the entire hobby from every preceding period.

Semiannual means an event that happens twice a year, every six months. In business surroundings, semiannual is something that is recurring like payments or an interest fee.

If you want to calculate what your investments may be really worth primarily based on returns that compound semiannually, first, divide the yearly fee of going back by way of 100 to convert it to a decimal. 2nd, divide the once-a-year price as a decimal by way of 2 to transform it into a semiannual fee for going back.

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