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October 7th, 2015, 07:39 AM  #1 
Newbie Joined: Oct 2015 From: canada Posts: 9 Thanks: 0  Financial math question
Hey guys, sorry if this is in the wrong thread, first post here, I have a question I am stuck on and would love some help on. If you were to invest $12000 today, how much will you have in 25 years at 10 percent ( compounded semi annually ) I know for when its not semi annually it would be 12000 * (1.1)^25 = 130 020 and the answer to the original question is 12000 * 11.467 =137604 (5%, 50 periods) Just not too sure how that answer was found. thanks in advanced! 
October 7th, 2015, 07:52 AM  #2 
Math Team Joined: Jul 2011 From: Texas Posts: 3,016 Thanks: 1600 
$P = P_0\left(1 + \dfrac{r}{n}\right)^{nt}$ where $P_0$ = initial investment $r$ = APR as a decimal $n$ = number of compounding periods per year $t$ = number of years for your problem ... $P = 12000\left(1 + \dfrac{0.10}{2}\right)^{50}$ $P \approx 137609$ 
October 7th, 2015, 08:45 AM  #3 
Math Team Joined: Jan 2015 From: Alabama Posts: 3,264 Thanks: 902 
Essentially, you can use your initial formula but use "half a year" instead of a year. The interest is 10% per year so 5% in a half year. There are 25 years but 50 half years.


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