Step-by-step explanation:
A = Future value of the amount invested
P = principal (amount of money invested) = $9,200
<em>i </em>= interest rate = 6% or 0.06
<em>n </em>= number of compounding periods (it is the number of times the interest is compounded).
For the <u>Interest Rate per Compounding Period</u> column, you'll have to divide the interest rate by its corresponding compounding period (please see the definitions of each compounding periods below). For example, the interest rate per compounding period (compounded annually) = interest rate ÷ number of compounding periods ( ) = 0.06/1 = 0.06 or 6%
For the <u>Number of Compounding Periods</u> column, you'll have to multiply (<em>t </em>) by the number of compounding periods (n):
<em>t × n</em> = 15 years × 1 = 15
The Compound Interest Formula column is pretty self-explanatory--you'll just have to follow the given formula. You need to make sure that you change the values for <em>i </em>and <em>n </em>for every row.
<u>Compounding periods (n):</u>
compounding annually: n = 1
compounding semiannually: n = 2
compounding quarterly: n = 4
compounding monthly: n = 12
compounding weekly: n = 52
compounding daily: n = 365
You'll have to use these values into your <u>Compound Interest formula</u>.
I will do the 2nd row (semi-annually) for you as a guide, but you'll have to do the rest so that you could familiarize yourself on how to do it.
Interest Rate per Compounding Period = <em>i / n </em> = 0.06/2 = 0.03 or 3%
Number of Compounding Periods = <em>t </em>× <em>n</em> = 15 years × 2 = 30
Compound Interest Formula:
Final Amount = 22,330.81