Question

The bank offers interest rate of 5.26%, compounded semi-annually. If you put $10 in the bank now, how much money do you have at the end of one year? (Round to the nearest cent.)

Answer 1

Future Value = C*[(1+(r/m))^mt]
where C is the present value that is 10.
r is the interest rate that is 5.26%.
t is the year that is 1.
m is the compounding period that is 2.
Future value = 10*[(1+(.0526/2))^2*1]
Future value = 10*[(1+(.0263))^2]
Future value = 10*[(1.0263)^2]
Future value = 10*(1.053292)
Future value = 10.53292
You have $10.5 at the end of one year.