How much interest will $1000 earn in one year at an annual rate of 8%; if interest is compounded every 6 months?
I've thought so far:
At 8% in one year interest will be 80. But it is compounded every 6 months.
So, after 6 months total amount will be $1040. Again at 8% in next 6 months, the amount will be $1081.6.
Therefore, the interest will be $81.6. Is it right?