jade invested $13,500 at 5.2% interest, compounded semiannually, and she wants to know how much her investment will be worth in 8 years Part 1: What is the periodic interest rate of jade investment Part 2: How many compounding periods does jades investment offer in a year? how about in 8 years?
Part 1: What is the periodic interest rate of jade investment?
Each compounding period is done semi-annually, which means twice a year. Since the given interest rate is annual, then 5.2% divided by half should yield the period interest rate, which is 2.6%
Part 2: How many compounding periods does Jade's investment offer in a year? how about in 8 years?
In 1 year, there are 2 compounding periods. In 2 years, there are 16 compounding periods.
