Simon Fraser recently received a $20 million donation to be used for scholarship purposes. If interest can be earned at 4.2% compounded monthly, determine the semi-annual amount of scholarships that students can apply for.

Question

Quizplus · Accepted Answer

To find the semi-annual scholarship amount, we use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount, P is the principal amount ($20 million), r is the annual interest rate (4.2% or 0.042), n is the number of times the interest is compounded per year (12 for monthly), and t is the time in years. Since we're looking for a semi-annual scholarship amount, t = 0.5 years. Plugging in the values: A = 20,000,000(1 + 0.042/12)^(12*0.5). Solving this gives approximately $20,423,692.20. The semi-annual scholarship amount is the interest earned over 6 months, which is $20,423,692.20 - $20,000,000 = $423,692.20.

Simon Fraser Recently Received a $20 Million Donation to Be