When interest is compounded semi-annually, the formula used to find the amount
of an investment is

, where
A represents the amount;
P represents
the principal invested;
i represents the annual interest rate, as a decimal; and
n
represents the number of years of the investment.
a) Use the formula to determine the
amount that each investment would be worth.
i) $5000 at a rate of 4%, compounded
semi-annually, for 10 years
ii) $4000 at a rate of 5%, compounded semi-annually, for 20
years
b) If interest is compounded quarterly, the formula becomes

. Use the
formula to determine the amount that the investments from part a) would be worth if interest were
compounded quarterly.
c) Explain the difference in the answers for parts a) and b).