How much would $500 invested at 9% interest compounded annually be worth after 4 years? 705.79
I haven't gotten the answer to that test question either....the choices seem wrong
The rate is 15.56%. The amount invested is irrelevant in this calculation.
If every six months the capital earn 10% interest which is compounded, at the end of 5 years, the interest will be 31875. If the annual interest rate is 10%, it makes no difference how often it is compounded. The six monthly interest rate is adjusted - to 4.88% rather than 5% - so that the total interest for a year is 10%.
The annual equivalent rate is 15.5625%. The amount invested is irrelevant to calculation of the equivalent rate.
$194.25 if interest is compounded annually. A little more if compounded quarterly, monthly, or daily.
Zero Coupon Municipal Bonds are special because, unlike other bonds, they have no periodic interest payments. Rather, the investor receives one payment at maturity. This payment is equal to the amount invested, plus the interest earned, compounded semiannually.