3 years ago

Please help with this

Mathematics

1 answer:

raketka [301]3 years ago

8 0

Answer:

I am not in your grade that Is way to hard

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A leading bank is coming up with an investment that pays 8 percent interest compounded semiannually. What is the investment's ef

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The effective rate is calculated in the following way:
$r = {(1 + \frac{i}{n} )}^{n} - 1$
where r is the effective annual rate, i the interest rate, and n the number of compounding periods per year (for example, 12 for monthly compounding).
our compounding period is 2 since the bank pays us semiannually(two times per year) and our interest rate is 8%
so lets plug in numbers:
$r = {(1 + \frac{8\%}{2}) }^{2} - 1 \\ r = {(1 + \frac{1}{25}) }^{2} - 1 \\ r = \frac{676}{625} - 1 \\ r = 0.0816 \: or \: 8.16\%$

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