Answer:
By the end of the first year Dara will have $903.125 in his account.
Step-by-step explanation:
Since this a compounded interest formula, it means that the amount invested grows exponentially overtime. In order to calculate the total of money over a period of time we must use the following formula:
M(t) = M(0)*(1 + r/n)^(n*t)
Where M(t) is the amount of money in "t" years, M(0) is the amount invested, r is the anual interest rate, n is the compound period over a year and t is the time elapsed in years.
In this problem the amount is compounded half-yearly, this means that for every year that passes the money is compounded twice, therefore n is equal to 2. Applying the data from the problem to the formula, we have:
M(1) = 800*(1 + 0.125/2)^(2*1)
M(1) = 800*(1.0625)^(2)
M(1) = 800*(1.0625)^(2) =903.125
By the end of the first year Dara will have $903.125 in his account.
