Answer:
compound interest in year 2 is 12.75% than compound interest in year 1. This is because semi annual compounding yield a higher compound interest
Step-by-step explanation:
compound interest = future value - present value
The formula for calculating future value:
FV = P (1 + r/m)^nm
FV = Future value
P = Present value
R = interest rate
N = number of years
m = number of compounding
compound value in the first year = 80,000(1.1)^1 = 88,000
compound interest = 88,000 - 80,000 = 8,000
compound interest in the second year = 88,000(1 + 0.01/2)^2 = 97,020
compound interest = 97,020 - 88,000 = 9020
Percentage change = (9020 / 8,000) - 1 = 12.75%
