Question

Scott invested 3,000 at 12% interest rate. if the interest is compounded semiannually,

how does it affect the investment

Answer 1

see below

Step-by-step explanation:

Compounding increases the principal amount or the invested amount. Scott invested $3000, which earns 12% compound interest every six months. After every six months, the interest earned will be added to the amount invested, meaning the investment will be more than $3000.

After the lapse of the 'second' six months, the interest earned with be added to the new invested amount. Therefore, at the end of the first year, the $3000 invested will be compounded or increased twice.