Step-by-step explanation:
A = Future value of the amount invested
P = principal (amount of money invested) = $9,200
i = interest rate = 6% or 0.06
n = number of compounding periods (it is the number of times the interest is compounded).
For the Interest Rate per Compounding Period 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 ( [tex]\frac{i}{n}[/tex] ) = 0.06/1 = 0.06 or 6%
For the Number of Compounding Periods column, you'll have to multiply (t ) by the number of compounding periods (n):
t × n = 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 i and n for every row.
Compounding periods (n):
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 Compound Interest formula.
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 = i / n = 0.06/2 = 0.03 or 3%
Number of Compounding Periods = t × n = 15 years × 2 = 30
Compound Interest Formula: [tex]A = 9,200(1 + 0.03)^{30}[/tex]
Final Amount = 22,330.81
