Answer:
Results are below.
Step-by-step explanation:
Giving the following information:
Principal (P)= $2,500
Interest rate= 4%
Number of periods= 2 years
First, we will determine the interest earned using the simple interest formula:
I= P*r*t
I= 2,500*0.04*2
I=$200
Now, using the compound interest formula:
I= [P*(1 + r)^t] - P
r= 0.04/2= 0.02 (semi annual interest rate)
t=2*2= 4 semesters
I= [2,500*(1.02^4)] - 2,500
I= $206.08
