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how do i calculate nominal interest rate compounded half yearly with no rate given. answer must be in % and correct to two decimal places. 

 Jan 10, 2019
 #1
avatar+17332 
+2

FV = PV(1+ int/2)^(yr*2)     interest = YEARLY interest       Divided by two to find interest per PERIOD (twice per year)

                                                     yr*2 = number of periods       = # years * 2 times per year

                                             FV = future value     PV = present value (or initial deposit)

 Jan 10, 2019
 #2
avatar+98154 
+1

We have that

 

A = P ( 1 + r/2)^(2n)

 

Assuming that we know 

A= the final amt

P = amt invested

n = number of years of compounding

 

We can find r = the interest rate thusly :

 

Divide both sides by P

 

(A/P)  = (1 + r/2)^(2n)       take each side to the 1/ [2n]  power

 

(A/P)^(1/ [ 2n] )  =   [ (1 + r/2)^(2n) ]^(1/ [2n] )

 

(A / P) ^(1 / [2n] )    =   1 + r/2          subtract 1 from both sides

 

( A / P)^(1/ [2n ] )  - 1  =  r / 2          multiply both sides by 2

 

2 (A / P)^(1 / [2n]) -  2     =  r

 

 

cool cool cool

 Jan 10, 2019
 #3
avatar+17332 
+1

...adding to Chris answer:      r will de the interest in DECIMAL form......multiply by 100 to get annual percentage.

ElectricPavlov  Jan 10, 2019
 #4
avatar+98154 
0

Thanks, guest.....!!!!

 

 

cool cool cool

CPhill  Jan 10, 2019

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