Mr. martin put $5000 into a trust fund on his daughter's 16th birthday. the trust fund pays 9% interest compounded semiannually. what will the trust fund be worth on her 21st birthday? how much interest did the investment earn? how much interest would have been earned if the trust fund was set up with only simple interest? we need to carefully read through the problem to pick out the information needed to plug into the compound interest formula: p - principal = $5000 apr - annual percentage rate = 9% = 0.09 n - # compounding periods a year, semi-annually = 2 (twice a year) y - # of years; 21-16 = 5 years plugging in we get: calculator keystrokes: 5000 x (1 + 0.09 ÷ 2) ^ (2 x 5) = to calculate the interest earned, we need to take the final amount and subtract the principal: $7764.85 - $5000 = $2764.85 and finally, to get the simple interest that would have be earned we plug into the simple interest formula: i = 5000(0.09)(5) = $2250.00 jesse decides to invest his income tax refund of $2300 in a cd earning 5.5% interest compounded quarterly. how much will the cd be worth in 3 years? how much more would be earned if it was compounded monthly at the same interest rate? quarterly: monthly: difference: $2711.58 - $2709.56 = $2.02 your turn: in the previous example, what would the cd have been worth if it was compounded semi-annually? round to the nearest cent and do not enter the $ symbol.