Question

Perry invests $2,832 in a retirement

account with a fixed annual interest rate of
3% compounded 2 times per year. What
will the account balance be after 13 years?

Answer 1

Perry's account balance after 13 years=$4,170.71

Explanation:

The account balance after a given amount of time can be expressed as;

A=P(1+r/n)^nt

where;

A=Future value of investment

P=Initial value of investment

r=Annual interest rate

n=number of times the interest is compounded annually

t=total period of investment

In our case;

P=$2,832

r=3%=3/100=0.03

n=2

t=13 years

Replacing;

A=2,832(1+0.03/2)^(2×13)

A=2,832(1.015)^26

A=4,170.71

Perry's account balance after 13 years=$4,170.71