Multiple choice

If $10,000 is invested at 10 percent annual interest, compounded semi-annually, what is the balance after 1 year?

  1. $10100.25 
  2. $10200.25 
  3. $11025
  4. $10100
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

For semi-annual compounding, the rate is 5% per period and there are 2 periods in 1 year. Balance = 10000 * (1 + 0.05)^2 = 10000 * 1.1025 = 11025.

AI explanation

To find the balance after 1 year with semiannual compounding, we divide the annual rate by 2 to get a periodic rate of 5%. Using the compound interest formula A = P times (1 + R/100) to the power of n, the amount is 10000 times 1.05 squared. Calculating 1.05 squared gives 1.1025. The final balance is 10000 times 1.1025, which is $11025.

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