Question

Jason’s savings account has a balance of $734. After 5 years, what will the amount of interest be at 10% compounded semiannually?

Answer 1

A=p(1+i/m)^mn
A=734×(1+0.1÷2)^(2×5)=1,195.61
Then calculate the interest
I=A-p
I=1,195.61−734=461.61

Answer 2

The amount of interest would be $ 461.61.

Explanation:

The amount that is compounded semiannually is,

`A=P(1+(r)/(2))^(2t)`

Where, P is the principal amount,

r is the annual rate of interest,

t is the time ( in years ),

Here, P = $ 734,

r = 10 % = 0.10,

t = 5 years,

Thus, his balance after 5 years,

`A=734(1+(0.1)/(2))^(10)`

`=\$ 1195.60865605\approx \$ 1195.61`

Hence, the amount of interest would be,

`I=A-P`

`= \$ 1195.61-\$ 734`

`=\$ 461.61`