Use the Compound Amount Formula $A = P \left( 1 + \frac { r } { n } \right) ^ { n t }$

question 30

Multiple Choice

Use the compound amount formula $A = P \left( 1 + \frac { r } { n } \right) ^ { n t }$ to find the accumulated amount on an investment of $\$ 1,500$ invested at an interest rate of $10 \%$ for 18 months, if the interest is compounded weekly.

• A)$9,058.80
• B)$1,795.52
• C)$1,552.78
• D)$1,742.50

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Definitions:

Compounded Semi-Annually

Interest calculation method where the interest is added to the principal sum twice a year, causing the interest to earn interest.

Strip Bond

A type of bond where the principal and regular coupon payments have been separated and are sold individually as zero-coupon bonds.

Interest

The cost of borrowing money, typically expressed as a percentage of the borrowed amount, paid by the borrower to the lender.

Effective Rate

The actual interest rate of an investment or loan when the compounding frequency is accounted for, giving a true reflection of the cost or yield.