An investor makes a 7 year deposit of $53,859. The bank is paying an interest rate of 10.28% per year, compounding half yearly.

Calculate "n" (number of periods).

Question

An investor makes a 7 year deposit of $53,859.  The bank is paying an interest rate of 10.28% per year, compounding half yearly.

Calculate "n" (number of periods).

BlackTom AI · Accepted Answer

To determine n, we need to relate the time horizon to the compounding frequency.
- The deposit is for 7 years, and interest compounds semiannually, which means 2 compounding periods per year.
- The number of compounding periods is therefore n = (years) × (periods per year) = 7 × 2 = 14.

Note that the actual interest rate per period or the future value would involve the per-period rate (10.28% / 2), but since the question asks for the number of periods, we only multiply the time span by the compounding frequency. The amount of the deposit does not change the count of periods, it only affects the accumulated value once n is known.

BFIN011 Week 2: Practice Quiz

An investor makes a 7 year deposit of $53,859. The bank is paying an interest rate of 10.28% per year, compounding half yearly. Calculate "n" (number of periods).

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