our uncle Vernon invests $200 compounding with an APR of 1% every 6 months, andhe does this for five years
Question
Our uncle Vernon invests $200 compounding with an APR of 1% every 6 months, and he does this for five years.
Solution
The question seems to be asking for the future value of an investment given certain conditions. Here's how you can calculate it:
Step 1: Identify the variables Principal amount (P) = $200 Annual interest rate (r) = 1% or 0.01 Number of times interest is compounded per year (n) = 2 (since it's every 6 months) Number of years the money is invested for (t) = 5
Step 2: Use the formula for compound interest The formula for compound interest is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest.
Step 3: Substitute the values into the formula A = 200(1 + 0.01/2)^(2*5)
Step 4: Solve the equation A = 200(1 + 0.005)^10 A = 200(1.005)^10 A = 200 * 1.051 A = $210.20
So, after 5 years, Uncle Vernon's investment will grow to approximately $210.20.
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