Question

$8000 is compounded semiannually at a rate of 12% for 21 years. Find the total amount in the compound interest account.

Answer 1

The total amount in the account will be $92456.26

Explanation:

To determine the amount in the account, we simply apply the compound interest formula;

`A=P(1+r)^(n)`

`A = 8000(1+0.06)^(42)\\A = 92456.26`

We divide the interest rate by 2 to determine the effective rate per semiannual.

We then multiply the number of years by 2 to obtain 42 semiannual payments