Question

Find the total amount a college student has in a savings account if ​$5 comma 000 was invested and earned 7​% compounded semiannually for 9 years. Use Upper A equals Upper P (1 plus StartFraction n Over n EndFraction )Superscript nt Baseline .

Answer 1

$ 9287.45

Explanation:

Since, the amount formula in compound interest,

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

Where,

P = principal amount,

r = rate per period,

n = number of periods per year,

Here, P = $ 5,000, r = 7% = 0.07, t = 9 years, n = 2 (semiannual in a year),

Thus, the amount after 9 years,

`A=5000(1+(0.07)/(2))^(18)`

`=5000(1+0.035)^(18)`

`=5000(1.035)^(18)`

= $ 9287.45