Question

Question 8 (1 point) Your investments grew from $1,000 to 1,700 in 6 years. What nominal annual interest rate compounded semi annually did you earn? (j2=?) Your Answer:

Answer 1

solution:

Let semiannual interest rate = i

Nos of semiannual period = 6*2 = 12

Investment amount = $1,000

Future value = $1,700

$1,000 * (1+i) ^12 = $1,700

(1+i)^12 = 1.70

1+i = (1.70)^1/12 = 1.045211

i = 4.52%

Annual interest rate = 4.52%*2 = 9.04%