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    Question

    If P is the amount invested at 5% p.a compounded half

    yearly for 2 years, what would be the amount received at the end of 2 years?
    A P(1.025)4 Correct Answer Incorrect Answer
    B P(1.1) Correct Answer Incorrect Answer
    C P(1.05)² Correct Answer Incorrect Answer
    D P(1.025)² Correct Answer Incorrect Answer

    Solution

    When compounded half yearly, A = P (1 + r / 200)2t = P (1 + 5 / 200)2x2 = P (1 + 5 / 200)4 = P (205 / 200)4 A = P(1.025)4

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