You deposit 500 in a bank in a 1-year time deposit with a


Question: You deposit $500 in a bank in a 1-year time deposit. With a time deposit you cannot withdraw funds from the account until the end of the term. Interest in the account is compounded semiannually (m = 2) at the annual nominal rate of 8%. In the final compounding interval, what is the dollar amount of interest that is earned from earlier interest (rather than off of the original principal)? In the final compounding interval, what is the dollar amount of interest that is earned from earlier interest?

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Finance Basics: You deposit 500 in a bank in a 1-year time deposit with a
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