rate of 5% is the semiannual rate, or the rate for a six-month period. To convert the semiannual rate to an annual rate, we multiply 5% x 2, the number of semiannual periods in a year. This means that the rate of increase for the basket of goods is10% per yearcompounded semi...
If the compound period is also monthly, the discount rate for a monthly payment period (p=12) simplifies down to i = r / 12. To determine the discount rate for monthly periods with semi-annual compounding, set k=2 and p=12.Daily Compounding (p=365 or p=360)...
Because the interest is compounded semiannually, we converted the annual interest rate of 8% to thesemiannual rate of 4%. Calculation using theFV of 1 Table: To finish solving the equation, we search only the 4% column of theFV of 1 Tablefor the future value factor that is closest to ...