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November 6th, 2012, 11:42 AM   #1
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How to find the compound amount for the following deposit ?

Find the compound amount for the following deposit.

$19,000 at 6% compounded semi-annually for 5 years.
----------------------

i= 0.06/2

n= 2*5

n= 10

A= 19,000(1+0.06/2)^10

A= 19,000(1.0300)^10.

A= $25,534.41

What I can't understand is how do we get the "2" . Thanks.
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November 6th, 2012, 11:49 AM   #2
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Re: How to find the compound amount for the following deposi

The 2 results from the fact that there are 2 compounding periods per year.
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November 6th, 2012, 11:55 AM   #3
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Re: How to find the compound amount for the following deposi

And how do we know there 2 compounding periods per year ?
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November 6th, 2012, 12:01 PM   #4
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Re: How to find the compound amount for the following deposi

The problem states that the interest is compounded semi-annually, which means twice per year, every 6 months.
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November 6th, 2012, 07:00 PM   #5
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Re: How to find the compound amount for the following deposi

My bad, I get it now. Thanks.
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