What was the approximate total amount of interest paid on a 2-year, $1

Question

What was the approximate total amount of interest paid on a 2-year, $1,000 note that pays interest at an annual rate of 6 percent compounded semiannually?

A. $120
B. $113
C. $108
D. $106
E. $101

Kinshook · Answer

Asked: What was the approximate total amount of interest paid on a 2-year, $1,000 note that pays interest at an annual rate of 6 percent compounded semiannually?

P = $1000
n = 2*2 = 4
r = 6%/2 = 3%

A = P (1+r)^n 
A = 1000 (1.03)^4 = 1000 * 1.1255 = 1125.5
Interest paid = A - P = 125.5
= 120 approx

IMO A

Archit3110 · Answer

SI = p*r*t
since its semi annually so 
n= 4 ; r ; 6/200
so ; 1000 * 6/200 * 4 ; 120 
IMO A

TheNightKing · Answer

In case of Semi-annually, you should divide the yearly rate by 2. So in this case it is 3%.
In case of quarterly, you should divided the yearly rate by 4. Let's say if ROI is 8% then it becomes 2% per quarter.

Coming back to the question. You don't need to calculate anything.
Let's say it is simple interest, then you will earn 30*4 for 2 years. which is 120. 
Now in reality you have earned more than 120$ because it is Compound interest. But there is no option >120$.
Hence it is A.

Jihyo · Answer

is it possible to calculate this mentally?
 Bunuel

What was the approximate total amount of interest paid on a 2-year, $1

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What was the approximate total amount of interest paid on a 2-year, $1

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