Question

Hannah has deposited $742 in a savings account that earns interest at a rate of 3.9% compounded twice a year. what will the account balance be in 11 years?

a. $770.94
b. $1721.65
c. $1134.81
d. $2893.80

Answer 1

Option c. $1134.81

Explanation:

Hannah has deposited $742 in a savings account that earns interest at a rate of 3.9% compounded twice a year.

compound interest equation :

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

Where A = Future Amount

P = Principal amount ($742)

r = rate of interest 3.9% ( 0.039)

n = number of compounding in a year ( 2)

t = time in years ( 11 years)

`A=742(1+(0.039)/(2))^(2(11))`

`A=742(1+0.0195)^(22)`

`A=742(1.0195)^(22)`

A = 742 ( 1.52939287)

A = 1,134.80951 ≈ $1,134.81

Option c. $1134.81