Calculate Interest Rate & Earnings: $150 -> $275 in 8yrs

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SUMMARY

The discussion focuses on calculating the interest rate required for a principal of $150 to grow to $275 over 8 years with semi-annual compounding. The formula used is I = P(1 + r/n)^(nt), where P is the principal, r is the interest rate, n is the number of compounding periods per year, and t is the number of years. Additionally, the impact of compounding frequency on a $1000 investment at 6% interest is analyzed, highlighting the difference in earnings between semi-annual and annual compounding.

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1. Determine the interest rate for a principal of $150 to amount to $275 in 8 years with interest compounded semi-annually.

2. Suppose you deposit $1000 in an investment account for one year at 6%. How much more money will you receice if the investment is:
compounded semi-annually instead of annually.
 
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Use the equation

I = P( 1 + r/n ) ^nt
 
sp00ky, please read the posting rules for this section in the sticky at the top of the threads in this section.
 

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