Question

Use the formula for compound amount:$14,800 at 6% compounded semiannually for 4 years

Answer 1

Given the question in the question tab, the following are the solution steps to answer the question.

STEP 1: Write the formula for calculating compound amount

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

where

A = final compounded amount

P = initial principal balance

r = interest rate

n = number of times interest applied per time period

t = number of time periods elapsed

STEP 2: Write the given data

Semiannually means that n will be 2

`P=14,800,r=(6)/(100)=0.06,n=2,t=4`

STEP 3: Calculate the compound amount

`\begin{gathered} A=14800(1+(0.06)/(2))^(2*4)\Rightarrow A=14800(1+0.03)^(2*4) \\ A=14800(1.03)^8 \\ A=14800*1.266770081 \\ A=\text{\$}18,748.1972 \end{gathered}`

Hence, the compounded amount after 4 years is $18,748.1972