00:01
Alright, this is a compounding interest problem.
00:04
It says dequan hopes to earn $1 ,500 in interest in 2 .9 years time from $120 ,000 that he has available to invest.
00:14
To decide if it's feasible to do this by investing in an account that compounds semi -annually.
00:19
So as soon as we're talking semi -annually, i'm thinking of the compounding interest formula.
00:26
A equals p times the quantity of 1 plus r over n to the nt power.
00:31
So p is going to be that principal that you can invest.
00:35
So he has $120 ,000 to do that.
00:39
They've already established what would the annual rate of interest have to be.
00:43
So we know we're solving for r.
00:45
Because this is compounding semi -annually, it's going to compound twice in a year.
00:50
And they want to do it in 2 .9 years time.
00:54
Now what's weird is going to be the fact that he hopes to earn $1 ,500.
00:59
Well a is that future value.
01:01
So if he started with $120 ,000 and he wants to add that $1 ,500, the future value of his account will be the $120 ,000 plus the $1 ,500.
01:15
So now we have to be able to solve this problem here.
01:18
So the first thing i need to do is get rid of this $120 ,000 in the front.
01:23
So i want to divide by $120 ,000.
01:26
So that 1, whoopsie, i did that by accident.
01:31
1 plus r over 2 to the 5 .8 because 2 times 2 .9 is 5 .8...