Problema Solution
Investing $12,000 in a savings account at 2% annual interest compounded semiannually will result in approximately how much money after 5 years?
Use the formula: A=P(1+r/m)^(mt)
Answer provided by our tutors
P = $12,000
r = 0.02 or 2%
m = 2 (semiannually means 2 times per year)
t = 5 years
A = the future value
A = P(1+r/m)^(mt)
A = 12,000(1+0.02/2)^(2*5)
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A = $13,255.47
After 5 years there will be $13,255.47 in the saving account.