We use cookies to personalise content and advertisements and to analyse access to our website. Furthermore, our partners for online advertising receive pseudonymised information about your use of our website. cookie policy and privacy policy.

In order to compare investments, analysts will convert monthly, quarterly, semi-annual rates to annual rates. If an investment of $100,000 is invested at 4.5% twice a year compounded semi-annually, the growth can be modeled by the equation A(t)=100,000(1.045)2t. What is the equivalent annual growth rate for this investment (rounded to the nearest tenth of a percent) and what is it worth (rounded to the nearest whole dollar) after 15 years?
a. 2.2%, and $139,114
c. 9.2% and $374,532

 Jan 16, 2019

The equivalent annual growth rate would be  

   wait a minute....this makes me a bit confused:     $100,000 is invested at 4.5% twice a year compounded semi-annually(

 (I think this means you get 4.5% added to your investment  each 6 months....yah? I think this would be the same as 9% compounded semi)

Assuming you have the correct equation, at the end of ONE year

A = 100000(1.045)^2 = 109202.5        which is 9.2% growth  per year


At 15 years      A = 100000(1.045)^2(15)    = $374531.81 ~$ 374,532

 Jan 16, 2019
edited by ElectricPavlov  Jan 16, 2019
edited by ElectricPavlov  Jan 16, 2019

10 Online Users