Problema Solution
Jason’s savings account has a balance of $734. After 5 years, what will the amount of interest be at 10% compounded semiannually?
Answer provided by our tutors
The amount A after t years with a principal P and a per annum interest rate r, compounded n times per year is:
A = P (1 + (r/n))^ (n*t)
In our case we have
P = $734
t = 5 years
r = 10% = 0.1
n = 12/6 = 2 times per year (since amount of interest is compounded semiannually)
A = 734 * (1 + (0.1/2))^(2*5)
A = $ 1,195.61 approximately