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.
