Question

Jeanne Crawford had $9,675.95 deposited in an account paying

6.25% interest compounded semiannually.
a. What is the amount in her account 2 years later?
b. What is the compound interest?

Answer 1

a. $10,943.30

b. $1,267.35

Explanation:

P = $9,675.95

r = 6.25% = 0.0625

t = Compounded Semiannually = 2

a. Amount after 2 Years

n = 2

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

A = $9,675.95 [1 + (0.0625 / 2)]² ˣ ²

A = $9,675.95 [1 + 0.03125]⁴

A = $9,675.95 [1.03125]⁴

A = $9,675.95 x 1.130982

A = $10,943.30

b. Compound Interest

Compound Interest = Final Amount - Principal Amount

Compound Interest = $10,943.30 - $9,675.95

Compound Interest = $1,267.35