how do i calculate nominal interest rate compounded half yearly with no rate given. answer must be in % and correct to two decimal places.
+37157 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)
+130071 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
+37157 ...adding to Chris answer: r will de the interest in DECIMAL form......multiply by 100 to get annual percentage.
