Little miss buffet takes all the money from her piggy bank and puts it into a savings account at her local bank. the bank promises an annual interest rate of 2.5% on the balance, compounded semiannually. how much will she have after one year if her initial deposit was $200?

Given:
Initial deposit : $200
Interest rate: 2.5% per annum
Compounded semi annually or twice a year.

Compounded interest means that the interest earned on the deposit also earns an interest.

C.I. = Principal (1 + r/n)^nt

r = annual rate
n = number of times the rate is compounded annually

C.I = 200 (1 + 0.025/2)^2*1
C.I = 200 (1.0125)²
C.I = 200 * 1.025
C.I = 205

She'll have a total of $205. The $5 is the interest earned for the year.

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