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Answer :
Pete Air's investment of $10,900 at a 6% interest rate compounded semiannually will have a maturity value of approximately $15,540.78 in 6 years.
The question is about calculating the maturity value of an investment with compound interest. Pete Air wants to buy a Jeep in 6 years and invests $10,900 at a 6% interest rate compounded semiannually. To find the maturity value, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount on maturity, P is the principal amount ($10,900), r is the annual interest rate (6% or 0.06), n is the number of times interest is compounded per year (2 for semiannual), and t is the time in years (6).
First, we'll convert the interest rate to a semiannual rate by dividing it by the number of periods per year: 0.06 / 2 = 0.03. Then, we'll calculate the total number of compounding periods: 2 * 6 = 12. Now we can plug these numbers into the formula:
A = $10,900 * (1 + 0.03)^(12) = $10,900 * (1.03)^(12)
After performing the calculations:
A = $10,900 * 1.42576 ≈ $15,540.78
Therefore, the maturity value of Pete Air's investment will be approximately $15,540.78.
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