Question

Can someone help me solve this please? Karen Gaines invested $14,000 in a money market account with an interest rate of 1.75% compounded semiannually. Six years later, Karen withdrew the full amount to put toward the down payment on a new house. How much did Karen withdraw from the account?

Answer 1

Given that,

Karen Gaines invested $14,000 in a money market account with an interest rate of 1.75% compounded semiannually.

Six years later, Karen withdrew the full amount to put toward the down payment on a new house.

To find the amount withdraw.

we know that, formula for finding amount of compound interest as,

`A=P(1+(r)/(100))^n`

where P is the principal, nis the number of years, r is the rate of interest per annum.

Given that, interest rate of 1.75% compounded semiannually, therefore number of years is 6x2=12 years.

Substitute the values we get,

`A=14000*(1+(1.75)/(100))^(12)`
`=14000(1.0175)^{12^{}}`
`=14000(1.2314)`
`=17240.15`

Karen withdraws $17,240.15 from the account.